Fonterra Cooperative Group's new chair John Monaghan says the dairy giant's biggest challenge is to change the law which forces it to accept milk from any farmer and sell it to rivals at a subsidised price, according to a report in Dairy News.
Monaghan stepped into the role chairing the country's largest dairy processor just over a fortnight ago after John Wilson stood down due to ill health. He told Dairy News the need to secure changes to the Dairy Industry Restructuring Act, which enabled the 2001 creation of Fonterra, is the biggest challenge facing the cooperative. The legislation is currently being reviewed and the government expects to receive a report early next year with legislation tabled in parliament in 2019.
Under the current DIRA provisions, Fonterra has to accept milk from all-comers and must supply raw milk to rivals at a regulated price.
"We will push to get rid of the open-entry and open-exit provisions of DIRA; it's well past the use-by-date," Monaghan told Dairy News.
He said the main purpose of DIRA was to promote competition and to give farmers and Kiwis choices, but today New Zealand farmers can choose from about 10 independent processors, only five of which are New Zealand-owned, according to the report.