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Dairy Industry Restructuing Bill Passes Final Stage

25 July 2012

NEW ZEALAND - The amending bill to the Dairy Industry Restructuring Act (DIRA) completed its final parliamentary stage earlier this week.

Primary Industries Minister David Carter says the Dairy Industry Restructuring Amendment Bill is a significant step to continuing a competitive and innovative dairy industry.

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

The Bill also includes changes that allow Fonterra to move to its shareholder approved Trading Among Farmers (TAF) system.

“There has been considerable debate amongst Fonterra’s shareholder base around the merits of TAF. But after the shareholders voting in favour for TAF and the legislation passing today, it is time for Fonterra to move forward growing the opportunities that exist for the company both in New Zealand and overseas.”

Under the legislation, farmers will retain the ability to freely enter into Fonterra or exit to competing dairy processors and be assured of receiving a fair value for their shares, Mr Carter says.

Fonterra has welcomed the amendment bill, with Chairman Sir Henry van der Heyden saying: "The enactment of these changes to DIRA is another milestone as we move towards Trading Among Farmers. While the decision to implement TAF was always one for our farmer shareholders, we appreciate the Government's ongoing support for Fonterra and the role it has played in enabling the evolution of our capital structure."

Sir Henry says the Board is still working towards a November launch for TAF but this will be dependent on market conditions.

However, Federated Farmers' warns that there are some vital issues that the DIRA amendment bill does not address.

Willy Leferink, Federated Farmers Dairy chair said: “Where Federated Farmers is genuinely disappointed, is the Government failing to put Fonterra’s preferred constitutional safeguards into statute. That leaves a sour taste.

“It would have shown bipartisanship to have worked with the Opposition to place statutory limits on the size of the shareholders fund, the number of units any farmer can place in the fund and the number of dividends any one investor can hold.

“Given the Government is bending over backwards over its mixed-ownership model for state assets, I would have thought this a wise step.

“The Government seems to have missed an opportunity to ease the concerns of a large chunk of Fonterra’s shareholding and that disappoints us at Federated Farmers. As it stands, we are seemingly in a holding pattern until Fonterra Cooperative Group’s November AGM and constitutional vote."

TheCattleSite News Desk



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