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Rival dairy companies will soon be able to compete for a share of a Fonterra-controlled export trade worth hundreds of millions of dollars a year, the Government has confirmed.
But Fonterra chief executive Andrew Ferrier says the decision to end a range of export restrictions as part of the move could short-change New Zealand.
Agriculture Minister Jim Anderton said yesterday the Government had agreed to measures that would give New Zealand dairy exporters a chance to supply quota-controlled dairy markets including the butter trade to the European Union.
Fonterra was given exclusive rights to export to regulated markets in a range of countries with country-specific tariff quotas when it was formed in 2001, but these arrangements will expire over the next three years.
Under the new measures, restrictions covering butter exports to Canada, cheese to Japan and some cheese exports to the United States will be done away with.
Fonterra's exclusive export rights to the Dominican Republic and Canada - due to expire in June and July - will be extended to the end of the year.
Anderton said a bill would be introduced next month that would amend the Dairy Industry Restructuring Act to include the new measures.
"From 2008 on, export licences to these markets would be subject to the policy framework which is aimed at facilitating the competitive environment for dairy product processing and exporting envisaged in the [act]," he said.
The rest of the regulated dairy export markets would be allocated to exporters on the basis of the proportion of milk solids collected directly from farmers in New Zealand.
These include butter and cheese to the EU, milk powder to the Dominican Republic, prepared edible fat to Japan and the parts of the US cheese markets where New Zealand can designate the importer or importers.
The minister said export licences would be allocated annually up to 2009, with export licences of three years for those made from 2010.
Although he had yet to read the fine print, Ferrier said the decision to allocate quota on a proportional basis was "very logical".
"If they allocate quotas on the basis of the number of milk solids collected by the individual, that would be a sensible way of doing it."
But he took issue with the decision to deregulate some of the markets.
"It has been Fonterra's view that the Government should continue to regulate all of them, because we think that's the better way to ensure the benefit stays in New Zealand."
Alan Walters, chief executive of Fonterra rival Open Country Cheese, said the decisions were in line with what he hoped would happen, but he needed more time to analyse the detail.
