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Fonterra welcomes Commerce Commission's findings on the farmgate milk price

Monday 27 August 2012, 4:03PM

By Fonterra

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Fonterra has welcomed the Commerce Commission’s final Dry Run Report on the dairy co-operative’s Farmgate Milk Price, released today.

The report reflects recent changes to the Dairy Industry Restructuring Act (DIRA) which gives the Commerce Commission oversight of Fonterra’s Farmgate Milk Price.

Fonterra Chief Financial Officer Jonathan Mason says the report’s findings show that the methodology used to set Fonterra’s Farmgate Milk Price does provide for contestability in the market.

“Fonterra has satisfied all 13 of the key drivers for the Farmgate Milk Price reviewed under the statutory testing.  The dry run noted a minor issue relating to the calculated cost of capital and this has been addressed for the current season.”

Mr Mason noted that the Commission’s assessment provides a solid basis for confidence that our shareholders, the New Zealand public and wider stakeholders can have in the integrity of the Farmgate Milk Price.

“This outcome also provides a sound foundation for full reviews the Commerce Commission will undertake over the next 12 months and beyond,” he says.