Changes to DIRA Penalise Fonterra Co-operative

ANALYSIS - The New Zealand Ministry of Agriculture (MAF) has announced proposed changes to the Dairy Industry Restructuring Act (DIRA). Looking at raw milk regulations, MAF has proposed that Fonterra increase the volume of raw milk it makes available to independent processors.
calendar icon 27 January 2012
clock icon 1 minute read

The current regulations were introduced to prevent Fonterra refusing to supply raw milk to other processors or supplying it at monopoly prices. Fonterra currently controls 90 per cent of raw milk supply in New Zealand.

Dairy giant and co-operative, Fonterra, sees the proposed changes to Raw Milk Regulations as a step backwards.

The proposal would mean that Fonterra would have to supply competitors and new processors with an extra 200 million litres of milk a year.

Fonterra Chairman, Sir Henry van der Heyden, said the proposed changes to Raw Milk Regulations will not work and will have New Zealanders subsidising increasingly foreign-owned dairy processors that do not sell milk in New Zealand and who send their products and profits offshore.

Sir van der Heyden also said that the proposal would impose nearly NZ$200 million of additional costs over the next three years alone and work against the co-operative's efforts to reduce the price of milk in New Zealand.

In the proposals MAF also suggests that Fonterra provides greater transparency regarding how it sets its milk price.

Charlotte Johnston, Editor

Charlotte Johnston - Editor

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