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.
Primary Industries Minister Nathan Guy has released a discussion document seeking feedback on options to amend the Dairy Industry Restructuring Act 2001 (DIRA) and its regulations.
The document is in response to the Commerce Commission's report on the state of competition in the New Zealand dairy industry, which was released on March 1, 2016. By law the Minister is required to respond to this report within 90 days of receiving it.
"After considering this report I am releasing a discussion document on options to amend certain provisions of the DIRA and transition towards deregulation."
The discussion document is seeking feedback from the dairy sector on options including:
· Amending the Dairy Industry Restructuring Act (Raw Milk) Regulations 2012 so that Fonterra no longer needs to sell milk at a regulated price to large, export-focused processors, and the volumes of regulated milk available to all other processors are gradually reduced.
· Amending the open entry provisions so that Fonterra no longer has to collect milk from new dairy conversions.
· Amending the sunset provisions so that the next competition review occurs in five years' time or if independent processors achieve a 25% market share in the North or South Island.
"As the industry progresses towards deregulation, this review progressively builds on changes made in 2012. We will see five large independent processors no longer eligible for DIRA milk from June this year."
Fonterra farmers can continue to sell 20% of their milk to other processors like artisan cheesemakers.
"I encourage all interested parties to have their say on this important piece of legislation that affects one of our largest export earning industries.
"I want to thank the Commerce Commission for its report, and the constructive way that dairy industry stakeholders have engaged in the process."
Submissions close on Wednesday, June 2 2016 and several public meetings will be held during June.
Information about the Dairy Industry Restructuring Act and review process is available on the Ministry for Primary Industries website: https://www.mpi.govt.nz/news-and-resources/consultations/proposed-changes-to-the-dairy-industry-restructuring-act-2001
