increase font size
A lot has changed since DIRA came into force 17 years ago and now two issues need urgent attention.
Fonterra farmers have been unhappy with aspects of the Dairy Industry Restructuring Act (DIRA) for some time.
In many respects DIRA still makes sense, but the farmers point out, quite rightly, that a lot has changed since DIRA came into force 17 years ago and now two issues need urgent attention.
DIRA was designed to promote competition, to give farmers the choice of who should get their milk. And today there are about 10 independent processors, about half of them overseas-owned.
Competition has been achieved: Fonterra’s market share has dropped from 91% to 82% and now the co-op must compete for milk. For example, Waikato can have tankers from as many as four different companies travelling its roads -- from Tatua, Fonterra, Synlait and Open Country Dairy.
DIRA now requires Fonterra to collect milk from any farmer who chooses to supply it. And that farmer may quit the co-op at will.
Similarly, new dairy companies may pick and choose which farmers they sign up. This has seen new companies enter the market so that their suppliers, knowing that if it didn’t work out they could return to Fonterra, had the confidence to move their supply.
Fonterra argues that this means there’s no longer a need for open entry and that if it continues too long it will wipe out the progress made.
Also needing review are DIRA raw milk regulations that require Fonterra to supply raw milk at a regulated price to independent dairy companies.
That makes sense in the domestic market, but when overseas-owned independent processors buy subsidised milk from Fonterra and then use it to compete with the co-op in overseas markets, something isn’t right.
Fonterra farmers correctly insist we need to be giving New Zealand-owned dairy companies a fair go, rather than see NZ dairy farmers subsidising foreign-owned companies. Fonterra farmers want to see as much value as possible captured from NZ milk for Kiwis.
Parts of DIRA need changing because times have changed. When Fonterra was formed it was nearly a monopoly, but now it must compete for milk.
Private companies get to choose their suppliers and Fonterra must be free to do the same.
Foreign Affairs Minister Winston Peters has joined the debate around the proposed sale of Fonterra’s consumer and related businesses, demanding answers from the co-operative around its milk supply deal with the buyer, Lactalis.
OPINION: Farmer shareholders of two of New Zealand's largest co-operatives have an important decision to make this month and what they decide could change the landscape of the dairy and meat sectors in New Zealand.
OPINION: As CEO of the Dairy Board in the 1980s I was fortunate to work with a team of experienced and capable executives who made most of the brand investments that created the international consumer business Fonterra inherited. Soprole in Chile was the largest, but there were more than 20 countries where consumer marketing companies were established and Anchor and other brands were successfully launched.
Fonterra has delivered a fifth straight year of record organic milk price for farmer suppliers.
Fonterra says favourable weather conditions supporting pasture growth is boosting milk production.
Farmers are welcoming the Government’s revised science-based biogenic methane targets for 2050.
Like many manufacturers around the world, European agricultural machinery and tractor manufacturers are currently operating in a difficult market environment. But they are heading to the world’s largest agricultural machinery event in Hanover next month with a degree of cautious optimism.
Established in 2021, the John Deere Technician of the Year Awards champion the important contribution parts and service technicians make to the Australian and New Zealand agriculture, construction and forestry industries.
Foreign Affairs Minister Winston Peters has joined the debate around the proposed sale of Fonterra’s consumer and related businesses, demanding answers from the co-operative around its milk supply deal with the buyer, Lactalis.
The ACT Party says media reports that global dairy giant Nestle has withdrawn from the Dairy Methane Action Alliance shows why New Zealand needs to rethink its approach to climate.
Spinach is NZ's favourite leafy green, according to the Department of Statistics.
