Fonterra Acknowledges Next Step in DIRA Review

30 May 2016
Fonterra Acknowledges Next Step in DIRA Review

Fonterra has received the Government’s discussion document on options to amend the Dairy Industry Restructuring Act 2001 and associated Raw Milk Regulations, and will be providing feedback during the next stage of the review process.

The discussion document has been released in response to the Commerce Commission’s report on the New Zealand dairy industry.

During the review process so far, Fonterra has indicated that the dairy industry has changed significantly since 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.

Fonterra sees a number of positive aspects in the discussion document released over the weekend.

“In particular, we welcome the proposal that we are 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,“ said Miles Hurrell, Group Director, Co-operative Affairs.

“However we are surprised the Government has not taken the opportunity to make broader changes to the legislation,” he said. “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.”

The Government is proposing only 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 Mr Hurrell.

“We will be engaging with MPI and the Government on these important issues over the next few weeks.”

ENDS

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