New Zealand’s Fonterra has said that it will freeze the price of wholesale domestic milk to supermarkets and retailers for the rest of the year in a bid to keep spiralling retail prices under control.

Fonterra, which supplies all the raw milk used for New Zealand’s domestic dairy products, has said that it will not increase domestic prices in spite of a 26% jump in the price it receives for international milk exports over the last six months.

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Fonterra’s announcement comes in response to mounting public concern over rising dairy prices. Yesterday (17 February) New Zealand agriculture minister David Carter called for a special report on the supply of domestic milk.

Commenting on the move, Fonterra CEO Andrew Ferrier said the company has absorbed around NZ$10m (US$7.6m) of increased costs already.

“We recognise milk is an important part of the diet in New Zealand and we want to ensure future generations of New Zealanders grow up enjoying it every day,” Ferrier said.

The news was welcomed by industry body the New Zealand Food and Grocery council.

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“The commitment made today to hold prices through to the end of the year should be welcomed by consumers. Fonterra deserves high praise for its decision to further subsidise the New Zealand market at significant cost to the company. This is a big financial commitment by Fonterra and we hope other Kiwis have some understanding and appreciation of just how significant this decision is.”