Why Fonterra accepted defeat in the dairy aisle
OPINION: Fonterra's sale of its consumer dairy business to Lactalis is a clear sign of the co-operative’s failure to compete in the branded consumer market.
DairyNZ says the decision to support regional-scale water infrastructure which will ultimately speed up the delivery of irrigation schemes.
The Government announced it will create a company to act as a bridging investor for regional water infrastructure. In addition, $80 million will be set aside in the 2013 budget for water infrastructure projects.
DairyNZ chairman, John Luxton, says the decision bodes well for the future of dairy farming and its contribution to the economy.
"The dairy industry is committed to sustainable use of water and will be releasing a new Sustainable Dairying Water Accord as well as a wider sustainable farming strategy. But, for continued development of the industry, we need to have confidence that the necessary big regional investments will happen."
Luxton says the Government is taking a comprehensive and strategic approach to resource use and its investment in water storage and irrigation, rather than making one-off, ad hoc decisions.
"This kind of approach will allow the dairy industry to plan for the long-term in a comprehensive and considered manner which will give others the confidence to invest too," he says.
"Investment in water infrastructure will have regional benefits stretching across generations. Farmers are already investing millions of dollars in irrigation systems and upgrading them to ensure efficient water use."
Luxton says this kind of government support is necessary because of the scale, complexity and capital requirements of regional scale irrigation and it will ultimately speed up the delivery of these schemes that will bring a range of community and economic benefits.
"The Government, quite rightly, sees irrigation as essential infrastructure that will have national economic benefits for the country as a whole. Its National Infrastructure Plan clearly sets that out and explains why it is prioritising this kind of investment," he says.
"The Government is investing in national economic growth through infrastructure, as it does on other fronts like transport.
"It is important irrigation is expanded in a way which does not deplete groundwater or river flows. This is why the industry is moving towards developing more irrigation schemes with water storage. Modern computer controlled spray irrigation systems are far more efficient and environmentally friendly than the old flood border dyke systems," he says.
Fonterra managing director cooperative Affairs, Todd Muller, says the investment announcement, coupled with the establishment of a Crown vehicle to co-invest in water schemes, was an important step towards boosting agricultural productivity and exports.
"Water is fundamental to dairying and agricultural productivity. Enabling a mix of public and private funding will give investors the necessary confidence to push ahead with schemes at the regional level.
"We will see benefits flow through in increased production and export earnings and we will also see the environmental benefits which will come from improved water flows.
"This investment will not only benefit the agricultural sector, but the economy as a whole."
