Dairy competition report released

The Commerce Commission has released the final report on the state of competition in New Zealand’s dairy industry.

Commerce and Consumer Affairs Minister Paul Goldsmith says “I would like to thank the Commerce Commission for its hard work and the expertise applied in delivering the report. We also appreciate the way that dairy industry stakeholders have engaged in the process.”

The report was commissioned by Primary Industries Minister Nathan Guy in consultation with Minister Goldsmith on 2 June 2015 as required under the Dairy Industry Restructuring Act 2001. The Act allowed the formation of Fonterra, and includes provisions to promote the efficient operation of dairy markets in New Zealand.

“The Commerce Commission formed an independent view based on its expertise as New Zealand’s primary competition regulatory agency. In summary, the final report has found that competition in the New Zealand dairy industry is not sufficient to warrant full deregulation at this time,” says Mr Guy.

The Commerce Commission recommended that the default expiry provisions in the Dairy Industry Restructuring Act be repealed and another competition review be carried out when either:

•       independent processors collect 30 per cent of the total milksolids in the North Island or South Island; or

•       at the end of the 2021/22 dairy season.

The Commerce Commission also recommended that Ministers consider options to:

•       facilitate the development of the factory gate market to gradually reduce reliance on regulated raw milk; and

•       allow Fonterra greater discretion in deciding whether or not to accept supplies of raw milk from new dairy conversions.

Mr Guy will now consider the report in detail before responding publically with the Government’s intentions within the 90 day statutory timeframe. The Government will then consult publicly on a package of policy proposals.

A copy of the Commerce Commission’s final report is available on the Commerce Commission website.

Information about the Dairy Industry Restructuring Act and review process is available on the Ministry for Primary Industries website.