David Russell, CEO of New Zealand’s Consumers’ Institute, has lambasted the domestic dairy industry for keeping prices artificially high and milking the public purse.

Fears that consumers would suffer with the formation of industry behemoth Fonterra last October are coming true, he told Stuff: “There’s one major milk supplier. That can’t be good in theory or practice for the New Zealand consumer.”

While international prices for milk and milk products have plummeted by as much as 25%, Russell pointed out, the price of a litre of milk on the domestic market has risen by around 50% in the past year. This is obviously unfair, he said, but “when the price of goods goes up overseas we cop it. But when they come down we hear every excuse in the book why they should stay where they are.”

He did not believe the situation was likely to improve, even with the Government’s requirement that Fonterra sell one of its two main domestic marketers, New Zealand Dairy Foods, this year to maintain competition.

A spokesman from Fonterra, created by the merger of the industry’s largest players NZDB, NZ Dairy Group and Kiwi Co-operative Dairies, insisted that there is often a time lag before domestic prices catch up with international trends.