Targeting Fonterra
A proposal by the Government for changes to the Dairy Industry Restructuring Act (DIRA) are bad news for the industry and the country, claims dairy farmer and Dairy Event committee member Lawrence Satherley.
The Government is suggesting more milk should be provided by Fonterra to other companies, saying competition and a more transparent price paid to farmers may mean New Zealand consumers pay less for milk.
But Mr Satherley said it would cost the country and Fonterra shareholders (dairy farmers) money.
More than 95 per cent of the milk produced in New Zealand is exported. There are bigger milk producers, but most milk is consumed internally, meaning New Zealand is a major player when it comes to international dairy trade.
‘‘The proposal is devastating. The Government should stand 100 per cent behind Fonterra. They are the ‘goose that laid the golden egg’ and they are being attacked from all angles.’’
He said he could not understand the assault, when all aspects of government should give credit to the organisation that is generating so much income for the country.
‘‘Attacking it does mean a loss of confidence.’’
Mr Satherley said health and drinking milk was important to New Zealanders.
‘‘You never hear about the cost of any other product. It seems to be stacked against milk. Take, for example, water, people flock to buy it. It seems to be at an exorbitant cost, because it is so cheap to produce.’’
But Mr Satherley said so much milk produced was exported, and there had been little attention on what it earned for the country.
‘‘The cost of milk here is governed by the price we get for it overseas. We can’t subsidise it. Fonterra froze the price last year. And by putting milk into schools, they are being pro-active.
‘‘They’re not being cheated by the price people pay for milk. Bread and grains have gone up, too. You have to pay the market price. Milk is fair value.’’
Mr Satherley said he hoped dairy farmers could change the minds of lawmakers so that Fonterra was not forced to sell more milk to competitors.
‘‘The consumer down the line, will realise what an asset Fonterra is to New Zealand.’’
Federated Farmers Manawatu/ Rangitikei president, and Kiwitea dairy farmer, Andrew Hoggard said the volume of milk that Fonterra must sell to other companies had increased from 600 million litres to 760 million litres.
‘‘Currently DIRA milk is virtually fully allocated. You have Goodman Fielder taking 250 million litres to supply the domestic market, Cadbury takes close to 30 million litres to make all their goodies, and then Synlait, OCD, NZ Dairies Ltd, Tatua Co-op, Westland Co-op, and Miraka all take 50 million each, which all gets exported. As well, there are a handful of really little players who take small amounts for icecream and other niche dairy products.’’
Mr Hoggard said the six companies that all took 50 million each would be forced to cease in three years’ time, which would leave 300 million litres free.
‘‘Does this country really want more players [probably foreign owned] making cheap milk powder and competing against Fonterra overseas?
How does that improve things for New Zealanders?’’
Mr Hoggard said it was time for submissions, so there was time to try and change the proposal.
As well, Federated Farmers said none of the proposed changes would reduce the retail price of milk.
‘‘Not one of the changes proposed to the Dairy Industry Restructuring Act, or its regulations, will make milk any cheaper in the supermarkets,’’ said Federated Farmers Dairy chairman Willy Leferink.
‘‘People seem to think farmers get all of the value from retail milk sales. Our share in a litre carton of retail milk is about 360 millilitres.’’
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