Govt favouring Fonterra, claim rival milk processors
A group of independent milk processors are accusing the Government of favouring Fonterra.
The outcry over domestic milk pricing and caps are mere "red herrings" when compared to the wider, underlying implications of the MAF consultative document on DIRA, she says.
"The whole tone of the paper, leaving aside the 5% of domestic milk and consumer milk prices, is about the other 95% of our milk and how our Government would have milk price suppressed where at all possible in the interests of 'competition'," says Guiney.
All farmers should be reading the 20-page document before the round of Fonterra TAF meetings next week, as the impact of the report is critical to their future, she believes.
The report refers to "efficient" milk pricing with suggestions throughout that Government needs to eliminate the risk of Fonterra choosing to maximise milk price.
It also explains why the Government sees benefits in TAF's shareholders fund as it would strengthen, to quote page 7, paragraph 41a of the document, "current incentives for Fonterra to pay an efficient milk price.
"The interests of external investors to maximise Fonterra's profit would provide some counterbalance to the interests of Fonterra's farmer-shareholders, whose interests are primarily to maximise the milk price Fonterra pays them as suppliers."
Guiney says if farmers don't want to read the whole document, they should at least read that section, not least because it also implies TAF will ultimately lead to a float which the Government sees as beneficial.
But there's worrying content elsewhere in the discussion paper, she points out.
Paragraphs 59 to 63 of the document outline options for the Commerce Commission to determine milk pricing in place of Fonterra, while 74e talks about giving investors in the proposed shareholders fund minimum protection rights to be able to remove the manager of the fund.
"I cannot fathom where our supposedly centre right Government gets its logic," she says.
"Have any of them calculated the cost to NZ of achieving a suppression in Fonterra's milk price? And I don't refer to domestic milk prices - that is a whole different argument [and] not as critical to our future as Government messing with regulating the price we are paid for the other 95% we export."
The link to the specifically TAF and milk price discussion document is:
http://www.maf.govt.nz/portals/0/documents/news-resources/consult/dira-2012/proposals-to-amend-dira-consult-doc-2-ris-24-jan-12.pdf
