Fonterra’s shock announcement on Friday to freeze the shelf price of milk for New Zealand consumers is drawing mixed responses.

The dairy giant announced last week it would halt the upward trend of milk prices, drawing praise from the food and grocery council, and consumer lobby groups.

Supermarkets announced on the weekend that they would be following suit, with Countdown, Woolworths and Foodtown pledging to freeze their prices too.

Food and Grocery CEO Katherine Rich says Fonterra’s announcement was a ‘gutsy’ one, given the global food climate right now.

"In terms of the company it will have a significant impact on Fonterra.

"This is a decision that imposes significant costs on the company, so that's why we think that Fonterra does deserve high praise for this decision.

"It's essentially further subsidisation of the New Zealand market."

And Agriculture Minister David Carter says the news is recognition of what we already know – that Kiwis are worried about increasing grocery bills.

“Fonterra have done a good thing here, and the two major food retailers have agreed in the spirit of co-operation to freeze the domestic price of milk.

“So that gives New Zealand consumers some measure of certainty for the rest of this year.”

The Minister says despite this announcement, he’s still asking MAF for a thorough review of the D.I.R.A regulations around competition.

“That work still needs to be done, I’ve asked MAF to do it within the next 10 days, they think they’ll have it for me by the middle of this week.”

Farming groups, however, say prices go both ways – and when they’re low, our economy suffers.

Federated Farmers Dairy president Lachlan MacKenzie says the announcement was as much of a surprise to him as anyone.

“It was a commercial decision made by Fonterra – they don’t let commercial decisions out of the bag at all, so it was a surprise to farmers as much as it was to everybody else.”

Mr MacKenzie says people can and do complain about the price of milk on shelf, but they have to realise farmers don’t benefit directly from those rises.

“If our price increases by 10c a litre – and milk has gone up over 8percent – there is a disparity between the price that farmers are getting and the retail price.

"We don't see that extra 10c a litre.”

MAF’s DIRA investigation is due out later in the week, so watch this space.