DIRA was introduced to ensure that New Zealand dairy markets remain contestable and efficient. It promotes contestability by ensuring that New Zealand dairy farmers can enter and exit Fonterra.
Under DIRA Fonterra has a statutory obligation to:
For more detail on the DIRA freedom of entry and exit requirements go to the Ministry for Primary Industries website.
Under the Dairy Industry Restructuring (Raw Milk) Regulations 2012, Fonterra must make up to 795 million litres of the milk it collects each season available to independent processors at either an agreed price or a regulated price.
Of that amount, the volume of raw milk that Fonterra must supply to:
Fonterra is required to disclose certain information including the forecast and actual figures for the season of:
For more detail on the DIRA Public Notices and Statutory Reviews.
Since the financial year ended 31 July 2009, the Farmgate Milk Price has been calculated in accordance with the Farmgate Milk Price Manual. The Farmgate Milk Price determines the amount paid for milk delivered to the farmgate by farmer shareholders.
For more detail on Milk Price Methodology.
As required under the DIRA, the Commerce Commission carries out a Statutory Review of both the Milk Price Manual and the Milk Price Calculation annually. For more information about the review process and for copies of the Commerce Commission’s reports can be located below.
Under section 150H of the Dairy Industry Restructuring Act 2001 (as amended in July 2012) the Commission is required to review Fonterra’s Milk Price Manual for each season and make a report on the extent to which it is consistent with the purpose set out in section 150A of the Act. To assist the Commission’s review Fonterra needs to provide the Milk Price Manual for the current season, together with recommendations of the Milk Price Panel in relation to the Setting of the Base Milk Price, notification of required changes, certification of why it meets the purpose, and supporting reasons before 1 August each year. The Commission is required to make its final report by 15 December each year.
Under Section 150O of the Dairy Industry Restructuring Act 2001 (as amended July 2012) the Commission must review Fonterra's calculation of the base milk price for each season and report on the extent to which it is consistent with the purpose set out in section 150A of the Act. To assist the Commission's review Fonterra must provide (by 1 July in each year) the assumptions adopted and the inputs and processes used by Fonterra in calculating the base milk price for the preceding season. They must also provide certification (including reasons) that the assumptions inputs and processes are consistent with the purpose set out in section 150A of the Act. The Commission is required to make its final report by 15 September each year.