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.
This removes the requirement on Fonterra to accept all applications from dairy farmers wanting to become shareholders and supply milk to Fonterra, or re-enter after leaving the cooperative.
Fonterra had been pushing for this change while independent processors like Open Country Dairy and Miraka wanted the provisions retained. Fonterra wanted the provisions changed to have more flexibility not to accept milk based on sustainability and environmental factors.
Agriculture Minister Damien O’Connor says the primary production select committee recommended that the open entry and exit provisions be removed.
“I agree with the committee on this point,” he says.
O’Connor says the dairy sector has changed considerably since 2001.
“The amendments we have made to this very aged legislation ensure this regulatory regime puts the sector in the best possible position in a post-Covid world,” O’Connor said.
“The Government is committed to building a modern and productive economy, and that means having fit-for-purpose legislation. We want to ensure the DIRA remains fit for purpose in a changing economic and social environment, and continues to deliver benefits O’Connor says the Government is determined to ensure the industry moves milk up the value chain.
“This change will enable Fonterra to invest in that higher-value end.
“The new and improved DIRA Bill will serve our dairy sector, and New Zealand, well for many years to come.”
