Fonterra submission: DIRA review Terms of Reference

Fonterra welcomes the opportunity to comment of the DIRA terms of reference.

We are advocating for parts of DIRA to remain, specifically the Milk Price Regime which provides a robust and independent framework, with oversight for setting a base milk price for Fonterra farmers that in turn supports the country’s dairy industry and wider economy. The Milk Price Regime, together with our co-operative ownership model, incentivises Fonterra to pay the maximum sustainable Farmgate Milk Price. This distinguishes us from most other NZ processors which are incentivised to minimise the cost of milk inputs and maximise their returns.

Fonterra also want the Raw Milk Regulations to stay, as they play an important role in supporting a plentiful supply of fresh milk and dairy products to New Zealanders and allowing niche producers, who are focused on bringing innovation to the NZ consumer market, to continue to access raw milk.

There are other parts of the Act which are no longer necessary in our view as competition in New Zealand’s dairy processing sector has increased substantially since DIRA’s inception. In addition, Fonterra is no longer vertically integrated in the NZ domestic market after divesting Mainland Group earlier this year. This removes the theoretical risk that we could favour our own business over other market participants. The domestic consumer market is well served by a range of innovative companies, who are supported by existing arrangements for Fonterra to supply them with milk.

We believe DIRA has achieved what it set out to do, with NZ dairy industry exports reaching $28.6 billion in 2026, up from $6.3 billion when DIRA came into force in 2001.

DIRA was always intended to include a pathway to deregulation. Fonterra recognise this needs to be done in a way that maintains the confidence of farmers, consumers and processors.

You can read the full submission below.