Given the quota market is probably worth at least $600 million annually - and generates tens of millions of dollars of quota-specific profits or "rents" - the final system is a big issue for Fonterra and rivals such as Open Country Cheese, Tatua and Westland.

The rents are the extra earnings resulting from the fact that goods exported under quota generally face lower tariffs, allowing for the extra margin to be pocketed.

Fonterra took control of the quota markets in a deal with Tatua and Westland.

Although the rents have declined significantly, they were still worth nearly $50 million last season and added 4c/kg of milk solids to Fonterra farmers' payouts.

This year, the companies made a confidential joint submission - containing sometimes differing views - to the Government on the way ahead.

Now Agriculture Minister Jim Anderton has invited opinions on a plan for the Government to allocate quota to a range of exporters for cheese and butter to the EU, to US markets where New Zealand is able to decide who it will import through, and for milk powder to the Dominican Republic.

For these markets, the Government believes it would be possible to enforce quota shares legally. But exactly how to allocate quota is what is up for discussion.

Source: The New Zealand Herald