By 3news.co.nz staff
The chief executive of Fonterra has told Campbell Live tonight that he has “nothing to hide” revealing Fonterra’s profit margins on milk to be around 12 percent.
"All we do is run a milk price which converts the world market price to the New Zealand equivalent,” Fonterra chief executive Andrew Ferrier told Campbell Live.
Mr Ferrier said for the first time that he welcomes the Commerce Commission’s inquiry into milk prices, as long as their intentions from the inquiry are made clear.
"We will give the Commerce Commission our entire milk price data as soon as they explain to us exactly what they want,” he says.
“We have nothing to hide.”
He says Fonterra’s milk pricing document - which the commission wants - merely explains how the company sets their prices, which he says is “simple”.
"What that manual says is: take the price from the world market - and we have an open exchange which says what that price is - and then convert that, say whole milk powder, take the cost of production of that whole milk powder back off an efficient producer and then that comes to the value of raw milk at a farm gate."
Mr Ferrier says it is the distributors who set the price consumers pay in the supermarket.
"Ultimately it’s the distributors who are buying product - whether you are in a dairy or a supermarket - who will set pricing polices as they see fit.
“They buy from us and they have there own pricing policies.”
He reiterates that Fonterra is not pointing the finger at supermarkets, saying price structures are often very complex.
“I've been in business a long time, the last thing you do is try to put important customers in a difficult situation - and I won't.”
Watch the full interview with Mr Ferrier.
3 News