The base milk price is the average price Fonterra sets for raw milk supplied by farmers, which is currently forecast to be $7.10 – $7.20 per kilogram of milk solids for the 2019/20 dairy season.
The Commission is required to review the calculation at the end of each dairy season under the milk price monitoring regime in the Dairy Industry Restructuring Act (DIRA). The regime is designed to provide Fonterra with incentives to set the base milk price consistent with efficient and contestable market outcomes.
“We are satisfied Fonterra’s calculation is largely consistent with both the efficiency and contestability purposes of the Act,” Commission Deputy Chair Sue Begg said.
“Our review this year focused on Fonterra’s administrative and overhead costs, as well as the range of commodity products manufactured and sold, and revealed no new areas of concern.”
The final report and related information can be found here.
