July 9, 2012

Fonterra's proposed acquisition will 'boost milk competiveness'

Fonterra has expressed to New Zealand's Commerce Commission that its proposal for the acquisition of New Zealand Dairies' milk powder facility in South Canterbury will boost the competition for milk in the South Island.

Fonterra has now applied to the commission for clearance to buy the Russian-owned plant at Studholme near Waimate, which went into receivership in May.

In an application, filed last week, the co-operative says its acquisition of New Zealand Dairies would increase its 82% share of the South Island raw milk supply by 2%. Fonterra says most suppliers in the South Island would continue to have a choice of processor if it bought the plant.

It has told the commission that buying the Studholme plant would stimulate competition among other New Zealand processors seeking milk for high value nutritional products.

The New Zealand Dairies receivers have also written to the Commerce Commission, supporting Fonterra's agreement to operate the plant during the sale process, so its 27 farmer suppliers can continue sending their milk there and receive the payment they're still owed for last season's milk.