Bill to Restructure Dairy Industry Passes 1st Reading

NEW ZEALAND - A Bill which oversees Fonterra’s farm gate milk price setting and aims to deliver a more transparent and efficient dairy market passed its first reading in Parliament this week.

4 April 2012

2 minute read

Oceania

Primary Industries Minister David Carter told Parliament that because of Fonterra’s dominance, its farm gate milk price is effectively the default price that all dairy processors in New Zealand must pay to attract supply from farmers.

“The Dairy Industry Restructuring Amendment Bill will oversee Fonterra setting the price it pays its farmers, ensuring a competitive and innovative dairy industry,” Mr Carter said.

“This Bill legislates for greater transparency of the way Fonterra currently sets its farm gate milk price through its milk price manual. It does not directly intervene in Fonterra’s milk price setting processes.”

The Bill also includes changes that allow Fonterra to move to its proposed Trading Among Farmers (TAF) system, should it choose to – a decision that ultimately sits with Fonterra not the Government.

“Under TAF, a farmer wanting to purchase or sell Fonterra shares would trade in a market rather than transacting directly with Fonterra, as is currently the case. In addition, an external fund will be established and farmers will be able to sell a portion of their shares in exchange for cash, with the investor then getting dividends and any change in value.”

However, Fonterra will remain 100 per cent farmer supplier-owned, as voting will stay with the farmer supplier, Mr Carter told Parliament.

The Bill has been sent to the Primary Production Select Committee for public submissions.