MP’s Comments On DIRA Unacceptable

The Chairman of New Zealand’s second largest dairy company, Open Country Dairy, has taken strong exception to comments made about the Dairy Industry Restructuring Act (DIRA) by Shane Ardern MP.

Laurie Margrain said that Mr Ardern’s comments show a huge conflict of interest.

“His statement strongly opposing amendments to the DIRA, which are currently being consulted on by MAF, show there is no way he could consider the legislation in an unbiased way.

It is unacceptable that he chairs the Select Committee on DIRA issues – he should stand down”, Mr Margrain said.

Mr Ardern was commenting on the public consultation document prepared by the Ministry of Agriculture and Forestry which recommends extending the anti-monopoly regime while Fonterra controls such a large proportion of the milk market.

Mr Ardern also claimed the Commerce Commission “got it wrong” in ruling that Fonterra should charge the actual cost of milk transport rather than Fonterra’s average cost. He said if Open Country didn’t like that “it should pick the milk up itself”.

“Mr Ardern clearly does not understand the law. The DIRA includes transport by Fonterra as part of the milk price. We do pick up our milk from our suppliers and would pick up the regulated milk if we were permitted to,” Mr Margrain said.

“The business community expects supposedly experienced senior MP’s to be properly informed and to respect the rulings of the Commerce Commission. To incorrectly condemn a Commission decision challenges their judgement.”

Mr Margrain said Open Country started business in October 2004 processing 50 million litres of default milk from Fonterra. At that time the company had only two dairy farmer suppliers.

“Over the years since then we have expanded our business to the point where we now have some 500 supplying dairy farmers around the country and three processing sites.”

“Without DIRA there would be no competition for raw milk in New Zealand. Competition previously existed between the various cooperatives. Competition is a fundamental protection for Fonterra suppliers against inefficient monopoly behaviour. It drives efficiency and innovation. Currently Fonterra controls 92 per cent of the raw milk market.”

ENDS

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