It’s time to free up Fonterra but the government plans to only tinker with the Diary Industry Restructuring Act:
National is opposing the Dairy Industry Restructuring Amendment (DIRA) Bill at first reading, as we believe competitive pressure should drive the dairy market forward rather than half-baked regulation, National’s Agriculture spokesperson Todd Muller says.
“National believes it is vital we have an efficient and innovative dairy industry that supports the long-term interests of farmers and consumers. This means having a strong Fonterra, strong smaller manufacturers and a robust domestic liquid milk and retail market.
“The Government’s Bill goes some way to achieving this, but National believes the time has come to reduce aspects of Fonterra’s regulatory burden.
“It makes sense that Fonterra can now build in robust animal welfare and environmental conditions in its supply terms. However we believe the New Zealand market is sufficiently mature for Fonterra to have the ability to treat returning suppliers on different commercial grounds than those who have stayed with the cooperative.
“We’re also opposed to Fonterra having to continue to support scale competitors with start-up milk supply. There is a vibrant competitive milk supply landscape in New Zealand, which is only going to increase as global interests eye up our milk pool. We no longer believe Fonterra needs to give these future competitors a hand up.
Requiring Fonterra to supply competitors might have been acceptable when the original Act came into force, setting up the company.
But there is now more than enough competition to enable new companies to establish themselves without forcing Fonterra to supply them.
That many of these companies are foreign owned is particularly galling given the three parties’ in government continue to rail against foreign ownership and have made it all but impossible for foreigners to buy farmland, unless they’re going to plant trees on it.
“National supports rural New Zealand and knows the importance of the dairy industry to our country. We want legislation that will help it succeed on the world stage not constrain it.”
The legislation that sought to encourage competition is now costing Fonterra too much.
It’s time to stop tinkering with it and free it from the rules that give its competitors a free ride at its expense.