The manual is the specific methodology Fonterra uses to calculate its base milk price – the amount farmers receive from Fonterra for each kilogram of milk solids 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).
Our role is to ensure that its methodology is consistent with the purpose of the DIRA. What this means is that we assess whether the manual provides an incentive for Fonterra to operate efficiently and that the costs, revenue and other assumptions it factors into the base milk price are practically feasible for an efficient milk processor.