Fonterra Council balks at dairy restructuring bill, government ‘intervention’
By Jonathan Underhill
March 29 (BusinessDesk) – Fonterra’s shareholders’ council says the overhaul of the dairy cooperative’s enabling legislation will end up regulating farmers’ earnings and sapping the life from New Zealand’s biggest export.
The Dairy Industry Restructuring Bill was tabled in the parliament this week by Primary Industries Minister David Carter. It replaces the original DIRA law that allowed Fonterra to be created. The cooperative will now be monitored by the Commerce Commission over its Farm Gate price and required to disclose its pricing model.
The bill “is about government-regulated committees determining how much farmers will earn from Fonterra’s overall business, 95% of which is exported and which is universally agreed to be the most efficient dairy industry in the world,” council chairman Simon Couper said in a statement.
“We haven’t seen that sort of thing in New Zealand since the 1970s and no one will increase their investment in an industry at risk of such government intervention,” he said.
The bill needs to be consigned to a select committee, where it will be subject to public submissions. It is part on an omnibus of charges planned for Fonterra including the Trading Among Farmers scheme and a review of rules around raw milk sold to rival dairy processors.
The cooperative has been sheeting much of the blame for kiwis’ perceptions that retail milk prices are high on to retailers and Couper says in his statement that many retailers are “charging four times what farmers are paid.”
“Hidden in this Bill are provisions concerning the farmgate Milk Price that, over time, run the risk of disintegrating New Zealand’s biggest, most successful and most important export industry,” he said.