The review—announced in May by Agriculture Minister Todd McClay—seeks to re-evaluate core provisions governing Fonterra Co-operative Group, including the base milk price calculation framework, wholesale milk supply obligations, and open entry and exit rules. While the government’s terms of reference emphasize lifting national productivity and reducing administrative burdens, OCD Chief Executive Mark de Lautour expressed deep concern that the initiative implies the best path to growth is weakening oversight on the market’s dominant player. De Lautour cautioned that previous legislative reviews have already chipped away at pro-competition safeguards, warning against further erosion.

While Fonterra’s share of New Zealand’s milk pool has contracted from 96% at its creation in 2001 down to 78% today, OCD points out that the processing sector remains structurally dominated by the cooperative. Independent competitors like Synlait, Westland, and Oceania Dairy hold no more than 4% market share each, leaving OCD—which recently expanded by acquiring Miraka and Mataura Valley Milk—as the only player with meaningful scale across 1,200 suppliers. Without DIRA’s strict protections, OCD argues that farmers could face reduced farmgate payouts, penalties for switching processors, and diminished bargaining power.

A key point of contention in the upcoming review involves Fonterra’s regulated wholesale milk supply obligations, particularly following its $4.22 billion sale of the Mainland Group consumer brand portfolio to French dairy giant Lactalis. OCD contends that a post-divestment Fonterra, focused exclusively on B2B ingredient manufacturing, would have both the capability and commercial incentive to charge inflated prices for raw milk and ingredients to third-party processors. OCD warns that relying solely on general competition law (the Commerce Act) rather than DIRA would destroy mandatory price transparency and uniform regional farmgate pricing.