Big review for dairy industry
The way is open for an ‘‘extensive’’ review of the dairy industry now that Parliament has passed the Dairy Industry Restructure Amendment (DIRA) Bill, says Minister of Agriculture Damien O’Connor .
A review would ensure regulations governing the dairy industry were ‘‘fit for purpose’’, said O’Connor during a visit to Southern Field Days near Gore.
He did not rule out that it could mean more regulations in the dairy industry, particularly on environmental issues.
‘‘DIRA was drafted in the early 2000s. We’re almost 20 years down the track, a lot of things have changed in the marketplace, and the competition within New Zealand and with the expectations of New Zealanders towards the dairy industry. All of those things will be up for discussion.’’
The legislation allowed for Fonterra’s formation in 2001 and for the co-operative’s dominant position in the dairy industry to continue.
The law change meant that provisions allowing farmers to enter and exit Fonterra would now no longer expire in the South Island on May 31 and thus allowing DIRA to remain.
O’Connor said it was not in the interest of the dairy industry or the wider economy for that to occur.
DIRA was there to create accountability for Fonterra so that it did not either trap farmers or lock them out. Passing the Amendment Bill allowed for DIRA to continue, which meant the Government could undertake the review, he said.
‘‘By rolling over the Act and committing ourselves to a wideranging review we are taking a considered and strategic approach to the changing needs of the dairy industry.’’
The emergence of new competitors since 2001 could have resulted in the removal of those restrictions placed on Fonterra because they collect enough of the milk market to be seen as competitive.
But the Commerce Commission last year found there was not sufficient competition to warrant the removal of the provisions.
O’Connor said the review would look at dairying’s environmental impact, land use, Fonterra’s obligation to collect milk, and how to achieve the best outcomes for farmers, consumers and the economy.
Details on the timing and delivery of the review will be considered by Cabinet in coming weeks.
‘‘Officials are currently working on the terms of reference for the review, and I intend to share these with the New Zealand public and the dairy industry in the first half of this year.’’
O’Connor indicated he was open to reviewing the regulations for Fonterra.
‘‘So in looking at that we’ve got to ask the question, what might be legitimate reasons that they might exclude anyone?
‘‘And they might be around environmental, they may be around animal welfare. I think they have a point and we’ve got to look at that seriously.’’
Federated Farmers dairy industry chairman Chris Lewis said he supported DIRA as long as its stuck to its core principles and purpose to create more competition in the sector, while enabling farmers to have more choice in the future.
He said the federation was looking forward to working with the MPI and the dairy sector on the review.
‘‘This is a great opportunity to reach a binding agreement on the future direction of the dairy sector as there are many challenges we are facing.’’