Wednesday, 12 June 2019 12:55

DIRA moving in the right direction — Editorial

Written by 

Fonterra farmers won’t be overly happy with changes announced last week to legislation governing the dairy industry.

In its submission to the Dairy Industry Restructuring Act 2001 (DIRA) review, Fonterra sought the Government’s help in three key areas: removal of open entry provisions, greater certainty in the sunset provisions for the DIRA, and changes to the raw milk regulations so that Fonterra no longer need supply new processors that are primarily focused on export markets.

The Government is retaining the open entry and exit provisions but is allowing the co-op some wriggle room. The co-op may still refuse milk supply from farmers “in circumstances where milk is not compliant or unlikely to comply with Fonterra’s terms and standards of supply”.

More importantly, Fonterra won’t be obligated to collect milk from newly converted dairy farms.

On Fonterra’s concerns about sunset provisions, the Government has decided DIRA will be reviewed “on a four to six yearly basis to provide regulatory certainty”.

A major point of discontent among Fonterra farmers has been the requirement that they supply raw milk at a regulated price to independent processors.

Fonterra accepts that the raw milk regulations stimulated competition in the domestic retail market which is good for consumers.

But it strongly opposes the requirement to provide its farmers’ milk effectively at cost to new processors who are typically backed by foreign capital and existing global businesses. 

These processors use this subsidised milk to compete with Fonterra and other New Zealand owned dairy businesses in export markets. 

The Government is proposing to remove the requirement for Fonterra to supply regulated milk to any independent processor that has its own supply of 30 million litres or more in a single season. This will be welcome news for the co-op and its farmers.

Agriculture Minister Damien O’Connor says the changes will provide certainty for the dairy industry and ensure the sector can pursue sustainable value growth for the benefit of all New Zealanders.

He agrees the industry has changed considerably since 2001 when DIRA was introduced.

The changes announced last week won’t put all of Fonterra’s concerns to bed. However, they go some way to levelling the playing field in the dairy industry.

They are moves in the right direction.

More like this

Fonterra R&D: Innovation needs more than just PhDs

Common sense and good human judgement are still a key requirement for the super highly qualified staff working at one of New Zealand's largest and most important research facilities - Fonterra's R&D Centre at Palmerston North.

Misguided campaign

OPINION: Last week, Greenpeace lit up Fonterra's Auckland headquarters with 'messages from the common people' - that the sector is polluting the environment.

Featured

Horticulture exports hit $8.4B, surge toward $10B by 2029

A brilliant result and great news for growers and regional economies. That's how horticulture sector leaders are describing the news that sector exports for the year ended June 30 will reach $8.4 billion - an increase of 19% on last year and is forecast to hit close to $10 billion in 2029.

National

Machinery & Products

Farming smarter with technology

The National Fieldays is an annual fixture in the farming calendar: it draws in thousands of farmers, contractors, and industry…

» Latest Print Issues Online

Milking It

110,000 visitors!

OPINION: It's official, Fieldays 2025 clocked 110,000 visitors over the four days.

Sticky situation

OPINION: The Federated Farmers rural advocacy hub at Fieldays has been touted as a great success.

» Connect with Dairy News

» eNewsletter

Subscribe to our weekly newsletter