Fonterra welcomes options to amend DIRA

A Fonterra milk tanker arrives at Fonterra’s Te Rapa plant near Hamilton, New Zealand Photo: Nigel Marple/Reuters

Dairy giant Fonterra said it sees a number of positive aspects in the discussion document released by the government on options to amend the Dairy Industry Restructuring Act 2001 (DIRA) and associated Raw Milk Regulations.

The discussion document has been released in response to the Commerce Commission’s report on the New Zealand dairy industry. Miles Hurrell, Fonterra’s group director on cooperative affairs, said in particular the cooperative welcomes the proposal that it is no longer required to sell milk to large processors who predominantly export their products.

“We’re also pleased to see the proposal that remaining processors are able to access less of our milk over coming years,” Hurrell said.

He said they were surprised, however, that the government has not taken the opportunity to make broader changes to the legislation.

“The requirement to accept all milk acts as a disincentive to Fonterra to invest in the right kind of assets and undermines the industry’s ability to grow value add business and maximise returns to NZ farmers, as we are all committed to do,” he said.

The government is proposing that Fonterra no longer have to collect milk from new dairy conversions.

“This is a step in the right direction, but doesn’t address the full issue of being required to take milk from all comers, even when it doesn’t make commercial sense to do so,” said Hurrell. “We will be engaging with MPI and the Government on these important issues over the next few weeks.”

During the review process, Fonterra has indicated that the dairy industry has changed significantly since the DIRA was introduced in 2001, with many new competitors, significantly increased competition and a robust and transparent milk price regime in place.

Fonterra believes that DIRA needs to evolve so the industry and Fonterra can create as much value for New Zealand and its dairy farmers as possible. Hurrell said they will be providing feedback during the next stage of the review process.

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