The Dairy Industry Restructuring Act 2001 (DIRA) requires us to complete two separate, but related, reviews of Fonterra’s setting of the base milk price for each dairy season – a review of Fonterra’s Milk Price Manual and a review of the base milk price calculation. Our Approach paper provides an overview of the framework we use in these annual reviews, including our interpretation of key legislative provisions and a summary of how the base milk price is set.
The manual is the specific methodology Fonterra uses to calculate its base milk price (also known as the farm gate price – the amount farmers receive for each kilogram of milk solids) for each dairy season. We undertake a review of the manual for each season. This review assesses whether the manual is consistent with the purposes of the milk price monitoring regime as set out in the Dairy Industry Restructuring ACT (DIRA).
At the end of each dairy season, we undertake a review of Fonterra's base milk price calculation. This review assesses whether the calculation is consistent with the purpose of the milk price monitoring regime as set out in the Dairy Industry Restructuring ACT (DIRA).