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.
Fonterra chairman John Wilson says the conclusion of the TPP agreement in Atlanta, USA, overnight was a small but significant step forward for the dairy sector.
"TPP has been an enormous undertaking," says Wilson, returning from Atlanta. "While the dairy outcome is far from perfect, we appreciate the significant effort made by Minister (Tim) Groser and his negotiators to get some gains in market access for our farmers.
"Dairy has been very hard to resolve and New Zealand has managed to get some progress against the odds. Our team has done well to lift the deal from where it stood at the ministerial meeting in Maui.
"While I am very disappointed that the deal falls far short of TPP's original ambition to eliminate all tariffs, there will be some useful gains for New Zealand dairy exporters in key TPP markets such as the US, Canada and Japan. Greater benefits will be seen in future years as tariffs on some product lines are eliminated."
Wilson says the entrenched protectionism demonstrated by the US dairy industry in particular had ensured that the deal on dairy failed to reach its potential.
The Dairy Companies Association of New Zealand (DCANZ) acknowledges the hard work that Groser and his team have put into concluding the TPP negotiations.
DCANZ says it is disappointed that the agreement has not delivered a more significant opening of TPP dairy markets, but knows that New Zealand negotiators made every effort to secure as much new access for dairy as possible.
"It was always going to be very hard given the starting point for dairy as one of the most protected sectors globally" says DCANZ chairman Malcolm Bailey.
"While further market opening is needed to help address price volatility in the global dairy market, the deal does contain some useful improvements.
"We thank Minister Groser and his team for the hard line they took to secure these new export opportunities for New Zealand dairy in the face of immense pressure from entrenched protectionist interests."
DCANZ will be undertaking a complete assessment of outcomes as fuller details of the TPP deal for dairy becomes available.
DCANZ understands the deal also includes positive outcomes for other agricultural products, and is pleased that other New Zealand primary sectors will see benefits. The good outcomes for other agricultural exports will help to demonstrate that free trade should not be feared, and by doing so create a platform for further opening of dairy markets.
"Removal of distortions from global dairy markets remains a key priority for DCANZ," says Bailey. "We will be looking closely at the trade policy landscape over the coming weeks, and talking to the government, to define a pathway forward."
