Raw milk supply rules to be reviewed
The days of Fonterra being forced to supply milk to competitors such as the planned milk powder plant at Arapuni could be numbered.
The Government will start a full review of its raw milk regulations in March, including the requirement for Fonterra to supply milk to other dairy companies.
The regulations are a key part of the Dairy Industry Restructuring Act (DIRA), passed nearly 10 years ago to enable the creation of Fonterra from a huge indus- try merger. At that time, Fonterra controlled 96 per cent of the country’s raw milk. Today that has been reduced to 92 per cent by new – but still comparatively tiny – milk processors.
The regulations, which include an obligation for Fonterra to supply competitors with up to 50 million litres of milk each a year, were intended to foster competition for the domestic consumer market and ensure farmers had a choice of supply company.
But today several of the new processors are buying the regulated Fonterra milk while competing with Fonterra in export markets.
Some of these companies have their own farmer suppliers, a fact that irks Fonterra leaders.
Agriculture Minister David Carter, when announcing in August the Government’s decision to extend DIRA to keep the reins on Fonterra, said the eligibility criteria for accessing regulated milk would be reviewed late next year.
However, he said a full review of the regulations would be undertaken by the Ministry of Agriculture in March.
Dav’id – Agriculture Minister
‘‘ It has been 10 years since the DIRA was introduced and over this time the dairy industry has evolved significantly. It is now appropriate to review the raw milk regulations to ensure that they remain fit for purpose,’’ he said.
‘‘This is likely to consider more than just the eligibility criteria and include the whole range of pro- visions under regulations.’’
Fonterra chief executive Andrew Ferrier welcomed the announcement.
‘‘The dairy industry has moved on since the regulations were put in place . . . .and we are looking forward to participating in the review.’’
Mr Carter said all interested parties would get their say as part of the review consultation process. If substantial change was proposed, this would require new legislation which a select committee would consider.
He doubted the review would be completed in time for the 2011-2012 dairy season. stuff.co.nz
MILK RIGHTS: The rules requiring Fonterra to supply milk to competitors may be changed.