On 2 June 2015, the NZ Primary Industries Minister requested a report from the Commission, and provided a Terms of Reference for the report.

The final report, published on 1 March 2016, provides the minister with an independent view on the state of competition in the New Zealand dairy industry.

Having considered submissions on the draft report released in November 2015, the Commission’s view remains that there is not sufficient competition at the farm gate and factory gate to consider full deregulation at this time. The final report recommends that a pathway to deregulation would be smoothed by facilitating the development of a factory gate market for non-DIRA milk. Options the minister should consider include:

• reducing DIRA milk entitlements
• investigating if and when the DIRA milk price covers Fonterra’s opportunity costs
• tightening the terms and conditions for DIRA milk supply.

The Commission had nine months to conduct the review. Within ninety days of receiving the Commission’s report, the minister must respond to the report, including by giving public notice of his intention to promote changes to the current market share thresholds, or measures that provide a transition pathway to deregulation, or both.