A report commissioned by the New Zealand government has rejected the possibility of deregulating the country’s dairy sector, insisting there is “not sufficient competition”.

The study, conducted by New Zealand’s Commerce Commission at the request of its Ministry for Primary Industries, said the dominance of the country’s largest dairy group – Fonterra – meant there is not enough competition at the farm and factory gate to support deregulation. 

Deputy chair Sue Begg said the risks of removing restrictions on the sector outweigh the risks of it retaining them longer than necessary. “As it stands, without regulation Fonterra would be able to increase the price of raw milk it sells to other domestic processors and this would likely flow through to higher retail prices of dairy products for New Zealand consumers,” Begg said. 

“Increased competition is needed, particularly at the factory gate, and our view is it is better to err on the side of caution before embarking on full deregulation.”

The investigation was required by the Dairy Industry Restructuring Act, which allowed the merger of New Zealand’s largest dairy co-operatives to form Fonterra. The DIRA contained provisions to safeguard farmgate milk prices. These provisions are intended to expire when there is workable competition in the domestic dairy market. 

How well do you really know your competitors?

Access the most comprehensive Company Profiles on the market, powered by GlobalData. Save hours of research. Gain competitive edge.

Company Profile – free sample

Thank you!

Your download email will arrive shortly

Not ready to buy yet? Download a free sample

We are confident about the unique quality of our Company Profiles. However, we want you to make the most beneficial decision for your business, so we offer a free sample that you can download by submitting the below form

By GlobalData
Visit our Privacy Policy for more information about our services, how we may use, process and share your personal data, including information of your rights in respect of your personal data and how you can unsubscribe from future marketing communications. Our services are intended for corporate subscribers and you warrant that the email address submitted is your corporate email address.