24 May 2007

Certainty for rights to regulated dairy export markets

Agriculture Minister Jim Anderton announced today that Cabinet has agreed to policy proposals that will provide future certainty for rights to regulated dairy export markets and allow all New Zealand dairy exporters to have a chance to compete for market share within regulated markets. In order to reduce compliance and administrative costs to the industry the proposals also include deregulation of some markets where regulation can no longer be justified.

“Ministry officials have been consulting with dairy industry stakeholders over the last few months on policy options. I want to acknowledge the constructive input from the industry during this process, which has resulted in some changes to the Government’s original proposals,” he said.

A Bill amending the Dairy Industry Restructuring Act 2001 (the DIRA) will be drafted to put the policy framework in place. It is intended that it will be tabled in the House in June. “Stakeholders and any other interested parties will have an opportunity for further input into the policy process during the Select Committee stage as the Bill is considered by Parliament,” Jim Anderton said.

Regulated dairy markets were established when the DIRA was enacted. They generally operate where importing countries have country-specific tariff quotas for New Zealand products. Under the DIRA, a subsidiary of Fonterra holds exclusive access to these markets for fixed periods, but these fixed periods expire progressively between mid-2007 and 2010.

“Some transition measures are needed,” Jim Anderton said. “So Cabinet has also agreed to make regulations under the existing DIRA to implement interim measures for two markets where the initial allocations to Fonterra will expire in June and July 2007. Export licences for these two markets will be allocated to Fonterra till the end of 2007. From 2008 on, export licences to these markets would be subject to the policy framework in the Amendment Bill, which is aimed at facilitating the competitive environment for dairy product processing and exporting envisaged in the DIRA.”

Export restrictions will be removed from the markets for butter to Canada, cheese to Japan and to parts of the US cheese markets.

For the remaining regulated dairy export markets (including butter and cheese to the EU, milk powder to the Dominican Republic, prepared edible fat to Japan and the parts of the US cheese markets where New Zealand can designate the importer or importers), export licences would be allocated to exporters on the basis of the proportion of milk solids collected directly from farmers in New Zealand. Export licences would be allocated annually between 2007 and 2009. For allocations made in 2010 and beyond, export licences would be allocated for periods of three years. Various other criteria would apply to the allocation mechanism.

The detail of this policy framework is outlined on MAF’s website, through the links for Policy: Consultations. www.maf.govt.nz/mafnet/consultation.htm

ENDS

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