Friday, 10 February 2012 14:25

Editorial - Proposed DIRA reforms a step backward

Written by 

THE GOVERNMENT’S proposed changes to dairy industry regulations are plain wrong. They are a kick in the guts for Fonterra’s 10,500 hardworking farmers. 

The Government is adamant the changes will reduce milk prices on supermarket shelves and boost competition in the dairy sector. Sadly, the Government is wrong on both counts. 

By forcing Fonterra to provide more subsidised milk to competitors, the Government is only making life easier for foreign investors in the dairy sector. 

They all buy raw milk from Fonterra but none of them puts milk on the domestic market. They turn cheap milk from Fonterra into exports with some profits they make ending up offshore.

These companies can also buy milk on the ‘shoulders’ of the season – not just the peak season – at which time its more valuable.

In essence the Government wants subsidies to continue for competing companies at a time when Fonterra itself is being asked to reduce the cost of milk to New Zealand milk consumers. 

It’s unfair to expect Fonterra to continue subsidising other processors and keep milk prices down at the same time. 

Is Fonterra the only player involved in retail milk pricing?

What about the supermarkets? Ensuring price reduction would also require keeping control of the cosy supermarket duopoly, which arguably has more influence over the retail price of milk than Fonterra. 

The fundamental issue is that Fonterra is a legal monopoly, dominating an economy in which the free market is supposed to rule.

There are very good reasons for keeping New Zealand’s dairy industry unified, as any comparison with the structure and performance of other agricultural sectors shows. 

Fonterra accepts the need for regulations to ensure fair competition.

But singling out Fonterra is not the way.

Right now it seems this Government is determined to assist privately-owned dairy companies at the expense of the locally-owned cooperative. This is plain wrong.

– Sudesh Kissun

Featured

Dairying deeply rooted in family

On the edge of the hot, dry Takapau plains, Norm and Del Atkins have cultivated a small but exceptional herd of 60 Holstein Friesian cows within their mixed breed herd of 360 dairy cows.

Mixed reaction to hiking levy rate

The DairyNZ board and management are currently trying to determine whether, and to what degree, their farmer levy payers will support any increase in their levy contributions.

Grasslanz scoops top science award

The Government's plan to merge the seven crown institutes presents exciting possibilities for plant technology company Grasslanz Technology, says chief executive Megan Skiffington.

National

Autumn drought challenge

After a dry summer, the challenge is what comes in autumn, according to Ballance Agri Nutrients science strategy manager Warwick…

Miraka CEO steps down

The chief executive of Taupo-based dairy company, Miraka – Karl Gradon - has stepped down from the role for personal…

Machinery & Products

Bigger but not numb

When you compare a RAM 1500 or Chevrolet Silverado to a Ford Ranger or a Toyota Hilux, you will understand…

Good just got great

Already well respected in the UTV sector for performance, reliability and a competitive price point, CFMOTO has upped the ante…

Nedap NZ launch

Livestock management tech company Nedap has launched Nedap New Zealand.

» Latest Print Issues Online

Milking It

Dairy awards

OPINION: Results of regional New Zealand Dairy Industry Awards (NZDIA) are trickling in but there's a worrying trend emerging.

Dock their pay

OPINION: It seems that the work rate of some parliamentarians is well below par.

» Connect with Dairy News

» eNewsletter

Subscribe to our weekly newsletter