Consultation has begun on potential amendments to the law to accommodate Fonterra's Trading Among Farmers idea.
The Ministry of Agriculture and Fisheries has opened consultation on possible amendments to the Dairy Industry Restructuring Act, which will run until Monday March 7.
Part of the act's role is to regulate Fonterra toensure dairy markets are contestable.
It requires the dairy co-operative to give farmers the choice to supply milk to Fonterra or not and Fonterra must issue and redeem its shares to farmers according to their decision.
The Trading Among Farmers proposal would change the way farmers enter and exit Fonterra and, if adopted, would require an amendment to the act.
MAF sector regulation and competition manager Andrew Hume said the primary objective would be to promote efficient dairy markets in New Zealand.
"[This is] achieved, in part, by ensuring farmers have freedom to choose whether or not to supply milk to Fonterra. Before amending the [act] to allow Trading Among Farmers to proceed, the Government needs to be assured that Fonterra's proposal can provide for both a sufficiently liquid market and the efficient pricing of milk."
This would mean farmers being able to trade shares in a timely manner, at competitive prices, to maintain their freedom to enter or exit Fonterra.
To view the consultation document, visit www.maf.govt.nz/consultation.
