Wednesday, 04 April 2012 09:42

DIRA though first reading

Written by 

A Bill which oversees Fonterra's farm gate milk price setting and "aims to deliver a more transparent and efficient dairy market" according to Prime Industries Minister David Carter, passed its first reading in Parliament yesterday.

Federated Farmers Dairy chairman Willy Leferink says the Dairy Industry Restructuring Bill (DIRA) is "arguably the most significant economic legislation to come before this Parliament".

"Having heard the debate, it shows there will be robust discussion about the DIRA," he says.

Carter told Parliament that because of Fonterra's dominance, its farm gate milk price is effectively the default price that all dairy processors in New Zealand must pay to attract supply from farmers.

The bill would oversee Fonterra setting the price it pays its farmers, ensuring a competitive and innovative dairy industry, Carter said.

"This Bill legislates for greater transparency of the way Fonterra currently sets its farm gate milk price through its milk price manual. It does not directly intervene in Fonterra's milk price setting processes."

The Bill also includes changes that allow Fonterra to move to its proposed Trading Among Farmers (TAF) system, should it choose to – a decision that ultimately sits with Fonterra not the Government.

"Under TAF, a farmer wanting to purchase or sell Fonterra shares would trade in a market rather than transacting directly with Fonterra, as is currently the case. In addition, an external fund will be established and farmers will be able to sell a portion of their shares in exchange for cash, with the investor then getting dividends and any change in value."

However, Fonterra will remain 100% farmer supplier-owned, as voting will stay with the farmer supplier, Carter told Parliament.

The Bill has been sent to the Primary Production select committee for public submissions.

Leferink said Federated Farmers looks forward to representing farmers through the select committee process.

"In many ways, we'll be discovering key information as the Select Committee process unfolds.

"That's why we are concerned to see the Select Committee process truncated to meet Fonterra's Trading Among Farmers (TAF) timetable. There are also some big fishhooks that we want to see resolved.

"Farmers like me voted for the principle of a shareholders fund, but that was two years ago and was based on a concept. We also thought it was tied to the cooperative's constitution and not the DIRA itself.

"Federated Farmers strongly believes farmer-shareholders must have a clear understanding of the value proposition involved.

"Over the next few months, Federated Farmers will work hard in the time allotted to consult our members and prepare high quality submissions.

"We need to reiterate that farmer-shareholders are the real stakeholders here. Legislation must not lead Fonterra's capital restructure and its shareholders must be left to determine the process without interference," Leferink concluded.

More like this

All eyes on NZ milk supply

All eyes are on milk production in New Zealand and its impact on global dairy prices in the coming months.

"Our" business?

OPINION: One particular bone the Hound has been gnawing on for years now is how the chattering classes want it both ways when it comes to the success of NZ's dairy industry.

Farmers' call

OPINION: Fonterra's $4.22 billion consumer business sale to Lactalis is ruffling a few feathers outside the dairy industry.

Wasted energy

OPINION: Finance Minister Nicola Willis could have saved her staff and MBIE time and effort over ‘buttergate’ recently by not playing politics with butter prices in the first place.

Featured

NZ household food waste falls again

Kiwis are wasting less of their food than they were two years ago, and this has been enough to push New Zealand’s total household food waste bill lower, the 2025 Rabobank KiwiHarvest Food Waste survey has found.

Editorial: No joking matter

OPINION: Sir Lockwood Smith has clearly and succinctly defined what academic freedom is all about, the boundaries around it and the responsibility that goes with this privilege.

DairyNZ plantain trials cut nitrate leaching by 26%

DairyNZ says its plantain programme continues to deliver promising results, with new data confirming that modest levels of plantain in pastures reduce nitrogen leaching, offering farmers a practical, science-backed tool to meet environmental goals.

National

Machinery & Products

JDLink Boost for NZ farms

Connectivity is widely recognised as one of the biggest challenges facing farmers, but it is now being overcome through the…

New generation Defender HD11

The all-new 2026 Can-Am Defender HD11 looks likely to raise the bar in the highly competitive side-by-side category.

» Latest Print Issues Online

Milking It

Full cabinet

OPINION: Legislation being drafted to bring back the controversial trade of live animal exports by sea is getting stuck in the…

» Connect with Dairy News

» eNewsletter

Subscribe to our weekly newsletter