Dairy giant Fonterra will reduce its domestic milk price from the end of the month and the savings look likely to be passed on to consumers at supermarkets.
In February 2011, Fonterra froze the wholesale milk price for News Zealand for the remainder of the year after public outcry, led by Northland's Manaia PHO, that an essential item was being priced out of reach of ordinary Kiwis.
Fonterra said the freeze was to shield New Zealanders from any big increases in international price which it was able to do, and on Monday a spokeswoman said the company's milk price for the domestic market will fall soon.
"Fonterra Brands New Zealand has notified retailers that there will be a reduction in wholesale milk price effective January 30. International dairy prices have softened since the highs of earlier last year," the spokesperson said.
"While they are on the rise again, we would expect to see local prices come down slightly," the spokeswoman said.
Ultimately, Fonterra said it was the retailers that set the price of milk for consumers and details on how much less the dairy giant would sell milk to retailers - and for how long - are still being worked out.
The doubling of international dairy prices in the last 18 months has pushed domestic milk prices up and consumption down. Traditionally, milk consumption in New Zealand increased between one and 2 per cent annually, but high prices have led to a decrease by a similar rate.
Fonterra last month announced it would give free milk to 14,000 Northland children under its Milk for Schools programme, starting in Northland from early next term.
Foodstuffs, which runs Pak N Save, 4 Square and New World supermarkets, welcomed Fonterra's announcement of the Milk in Schools programme, and resetting the local price of milk to make it more affordable within New Zealand.
Steve Anderson, Foodstuffs' managing director, said the company supports any initiative which enables improved nutrition for New Zealand children.
"We have been running our own school nutrition programme for the past five years called Food for Thought, and we agree that encouraging children to drink more fresh milk is a great way to support their growth," he said.
Mr Anderson said milk prices have been a hot topic the past year, and he appreciates that it has been difficult for many Kiwis to keep milk on their shopping list.
"We have always worked with suppliers to bring the best possible prices to our customers. We are pleased to hear that Fonterra are planning to reset milk prices within New Zealand, and we are looking forward to passing any savings directly to our customers."
Luke Schepen, spokesman for Progressive Enterprises, which runs Countdown supermarket, said the company would to wait to see what Fonterra's new price was before deciding what saving it could pass on to customers. He said the company was always looking to pass on savings.