The Dairy Industry Restructuring Act (DIRA), has been successful, but after 17 years it needs to be modernised says John Monaghan.

DIRA was enacted in 2001 to preserve competition in the New Zealand dairy market, in exchange for allowing the country's two largest dairy co-operatives to merge and form Fonterra.

Fonterra's chairman told The Country's Jamie Mackay, that there have been positives to the legislation, but it's time for change.

"Most farmers have choice in who they supply ... the New Zealand public have choice at the supermarket shelves. So it's done the job it was set up to do, but now we need to move on"

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Although Monaghan agrees with some aspects of DIRA, he said Fonterra takes issue with supplying product that ends up competing with the co-op in the global market.

"We certainly have no issue with supplying milk to our domestic market, but to supply milk to competitors who then take that product at basically a cost price and then compete with us on the shelves in China, doesn't seem like a fair go."

Read more: Fonterra wants one rule for all for in setting milk prices

Meanwhile, Monaghan said another successful GDT auction last night was a positive sign, with strong demand out of China helping prices lift by 0.9 per cent and whole milk powder by 0.3 per cent.

"More than 50 per cent of volumes was sold to Chinese bidders and also good demand from South East Asia - so that's encouraging."

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