Fonterra disappointed in review of dairy industry laws

Dairy giant Fonterra is disappointed with the outcome of a major review of current dairy industry legislation.

Agriculture Minister, Damien O'Connor has announced changes will be made to the Dairy Industry Restructuring Act 2001 (DIRA) and the Dairy Industry Restructuring Raw Milk Regulations 2012 (Raw Milk Regulations).

The DIRA was passed into law in 2001 and saw the creation of Fonterra. It also promotes the efficient operation of dairy markets in New Zealand.

Fonterra said the proposed changes would bring some improvements to the sector, but represented a missed opportunity to better support New Zealand.

Fonterra Chairman John Monaghan said while the Government had recommended tweaks to the rules under which Fonterra has to give its farmers' milk, effectively at cost price to foreign-backed competitors, the playing field is still tipped against New Zealand dairy farmers.

"Our farmer-owned co-operative wants an industry that promotes investment across regional New Zealand and where profits are kept in New Zealand.  We stand for an industry where New Zealand farmers are paid well for their milk and the unique attributes of our environment are protected and enhanced," he said.

John Monagan said it was missed opportunity to better support New Zealand.
John Monagan said it was missed opportunity to better support New Zealand. Photo credit: Supplied

 "Given the significant increase in competition within the New Zealand dairy industry, we're disappointed the Government did not recommend removing the requirement for us to supply our farmers' milk to large, export-focused businesses altogether," said Monaghan.

However, he said the co-op welcomed the Government's decision to give Fonterra the right to refuse membership where a farm is unlikely to comply with terms of supply, or where the farm is a new conversion. 

"These changes will support our co-op's ability to meet our customers' demands and continue leading the industry toward a sustainable future for our farmers and the rural communities in which they live and farm."

He said the Government's decision that the Minister of Agriculture would be able to nominate one person to sit on Fonterra's Milk Price Panel was noted with interest.

"Fonterra encourages the Government to extend this transparency and require all processors to publish the average price they pay to farmers, the key parameters of their milk price and examples showing the payout that would be received for different parameters."

Monaghan said Fonterra would constructively participating in the upcoming legislative process and would continue to push for an outcome that was in the interests of all dairy farmers and New Zealand.