What Would Synlait Be Worth to Fonterra or a2 Milk?
Speculation of a possible joint move by Fonterra and a2 Milk to buy Synlait raises a much bigger strategic question, says agribusiness expert Dr Nic Lees.
The co-op acknowledged the release today of the Government’s options paper on the review.
Fonterra says the DIRA Act is a complex piece of legislation and it’s important to New Zealand that the review is thorough.
‘We recognise the significant work that the Ministry for Primary Industries and Minister Damien O’Connor have put into the document and we appreciate their high degree of engagement with industry so far.
“We will now consider the document, then discuss with our farmers the impact the options may have on their families and businesses.
“Ultimately, we all want the same thing – a prosperous and sustainable dairy industry for New Zealand.”
Launching the consultation on an Otago dairy farm, O’Connor said the dairy industry must be fit for the future.
“It’s timely to take a strategic view of the challenges and opportunities facing the nearly $17 billion dairy sector,’’ O’Connor said.
“A productive and sustainable dairy sector that grows value and protects the natural resources it depends upon is vital to our economic prosperity and the wellbeing of all New Zealanders.”
In May the Government began a review of the Dairy Industry Restructuring Act 2001 (DIRA), which regulates Fonterra’s dominance in the market to protect the long-term interests of all farmers, consumers and the wider economy.
The dairy industry was built on the back of the DIRA legislation and it is a significant driver of the industry’s performance, says O’Connor.
“The review is looking at open entry and exit obligations, the farm gate milk price settings, contestability for farmers’ milk, the risks and costs for the sector, and the incentives or disincentives for dairy to move to sustainable, higher-value production and processing.
“It’s important to look at whether the DIRA has achieved its objectives, created unintended consequences, and whether it is still needed in its current form.
“We need everyone with an interest in the success of the dairy sector to take part in a frank appraisal of the issues,” O’Connor said.
The consultation runs until 8 February 2019.
