Fonterra has launched a public relations offensive as concern over the price of retail milk in New Zealand continues.
The dairy giant has begun issuing media statements, and has dedicated a new section of its website to defending the price of milk.
The company’s website argues it is global prices, not the way Fonterra sets the farmgate milk price, that determines the price Kiwis have to pay for their milk.
Fonterra also employed a United States economic firm, Compass Lexicon, to write a report on its role in the New Zealand dairy industry.
The Fonterra-funded report found Fonterra not only sets the milk price correctly, but that there has been a growth in competition in the New Zealand dairy market since Fonterra was formed.
Fonterra says the milk price debate is being stirred up by independent processors, who are jealous that they cannot match its returns.
However, Kaimai Cheese executive director, Wyatt Creech, told Country 99TV this argument is simply not relevant.
Mr Creech says no one is questioning Fonterra’s performance.
He says it is the complete lack of transparency into how Fonterra determines the farm gate milk price that is the problem.
Mr Creech says last year the default milk price setting mechanism was altered so it went from being a formula, based on the annual payout, to being internally set by Fonterra.
He says internal Fonterra documents that have been uncovered suggest the basis for calculating the price, the notional milk price, overstate the milk price based on Fonterra’s actual performance.
This means both independent processors and consumers are paying more than they should have to he says.
The Commerce Commission is expected to announce later this month whether it is holding an official inquiry into retail milk prices.
MAF, Economic Development and the Treasury government ministries, have all announced separate inquiries into the price of milk.
And last week, Fonterra announced that the retail price of butter and cheese will soon be dropping, following the international price trend downwards.
Fonterra Brands Managing Director, Peter McClure, said prices will come down in August for butter and cheese, but as yet there were no planned decreases for fresh milk prices.
