Changes made to dairy industry regulations

While retaining the contentious open entry and exit provisions, the Government will allow Fonterra the right to refuse supply from newly converted dairy farms.

It will also allow Fonterra to refuse milk supply from farmers in circumstances where milk is not compliant or unlikely to comply with Fonterra’s terms and standards of supply.

Other changes include;

• Limit Fonterra’s discretion in regard to setting a key assumption in calculating the base milk price, the asset beta. 

• The DIRA shall be reviewed on a 4 – 6 yearly basis, to provide regulatory certainty.

• Require Fonterra to appoint one member of its Milk Price Panel on the nomination of the Minister of Agriculture. 

• Remove the requirement for Fonterra to supply regulated milk to independent processors with their own supply of 30 million litres or more in a single season.

• Update the terms on which Fonterra supplies regulated milk to Goodman Fielder for the benefit of domestic consumers.

“These changes will provide certainty for the dairy industry and ensure the sector can pursue sustainable value growth for the benefit of all New Zealanders,” says Agriculture Minister Damien O’Connor.

“The industry has changed considerably since 2001, and it is important to ensure the regulatory regime puts the sector in the best possible position,” says O’Connor.

“The Government is committed to building a modern and productive economy and that means being smarter in how we work.  

”The changes we’re making will support our dairy sector to produce and export high value goods in a way that sustains the environment it relies upon. DIRA drives much of this work and after 17 years it’s the right thing to do to make it fit for the 21^stcentury.

“Following farmers, independent dairy processors, NGOs, and representatives of Maori interests around the country sharing their views, Cabinet this week approved changes to both pieces of legislation. They will now be progressed through Parliament.”