Agiculture MP Damien O'Connor calls for rural input

Agriculture and Biosecurity Minister Damien O'Connor (centre) talks with dairy farmers Anne-Marie and Duncan Wells about the future of dairy legislation. Photo: Ella Stokes

It is crucial farmers have their say in the public consultation of the dairy industry legislation review, experts say.

Last week, Agriculture and Biosecurity Minister Damien O'Connor visited an Outram dairy farm to launch a discussion document as part of the public consultation of the Dairy Industry Restructuring Act (Dira) 2001 review.

In May, the Government began a review of the Act which regulates Fonterra as the dominant player in the market, to protect farmers, consumers and the economy in the long term.

Ad Bekkers

Mr O'Connor said it had formed a discussion document of what was important.

''Things are moving quickly in the dairy industry, so we took the opportunity to go over what we think are the major issues.

''I encourage every dairy farmer to look at this and get back to us. . . because we will be listening.''

He said the legislation would not mean a massive change but he hoped it would create more of what people wanted to see.

Simon Davies

Taieri dairy farmer Philip Wilson said it was very timely to have it reviewed.

Mr Wilson said it was also an opportunity for the younger generation to have their say as it was important to give them confidence in the industry.

''It's a good thing to have it reviewed and to create more of a level playing field for competitors.''

Otago Federated Farmers chairman Simon Davies said he was keen to see it completed and also encouraged people to go to the public meetings.

''It's critical that farmers' voices are heard . . . as a farmer don't let someone else have your voice.''

Taieri farmer and Fonterra Shareholder Council representative Ad Bekkers said it would affect much more than the dairy industry.

''There has to be solutions bought to the table . . . it's not just for us, it's for the whole of New Zealand.''

Philip Wilson

Otago Federated Farmers dairy chairman Mathew Korteweg said ultimately Fonterra was a family-owned co-operative and he did not want to see it ''thrown around like a political football''.
''If Fonterra is performing well, so are farms and their communities.''

Submissions are due by February 8.

Mr O'Connor said he hoped to have ''it all wrapped up by the end of 2019''.

SUMMARY OF ISSUES

The discussion document preliminary analysis indicates that the Dira is:

* effective at achieving its core regulatory objective of managing Fonterra's dominance;
still relevant and needed at this stage; and
* unlikely to be encouraging inefficient industry growth or preventing Fonterra from pursuing a value-add strategy.
* But, the Dira appears to be:
* preventing Fonterra from effectively managing some aspects of its farmers' environmental performance, thus producing an unintended consequence; and
* providing access to regulated milk for large dairy processors for whom it may no longer be necessary, thus not being fit-for-purpose.

* In addition, there is an opportunity to consider whether the Dira should be amended to:
promote greater confidence in the base milk price calculation; and
* preserve competition in the domestic consumer dairy markets in the short term, while discouraging any undue regulatory dependency in the longer term.
* For more information about the discussion document and how to submit go to http://www.mpi.govt.nz/dira-review

Dairy Industry Restructuring Act (Dira) 2001 review

BACKGROUND

In 2001, the Dira allowed the creation of Fonterra through a merger between the two largest dairy co-operatives of the time and the New Zealand Dairy Board.

The Dira provides a framework to regulate the activities of Fonterra as a dominant dairy processor, including monitoring of its farm gate milk price-setting processes. It also provides for the dairy export quota management system and regulates herd testing and the dairy core database.

In 2015/16, as a statutory requirement, the Commerce Commission did a review of the state of competition in the dairy industry. Further to recommendations in the report, the previous government proposed changes related to competition in the sector. However, these were not considered by Parliament and were therefore not implemented.

On December 19, 2017, the Government announced a comprehensive review of the Dira and its impact on the dairy industry.

In February 2018, the Dairy Industry Restructuring Amendment Bill (No 2) was introduced to prevent the Dira's efficiency and contestability provisions from expiring in the South Island to allow time for a comprehensive review.

Southern Rural Life