The Government and Fonterra

Danya Levy and Andrea Fox at Stuff report:

Prime Minister John Key says proposed changes in the diary industry may result in cheaper milk and will give consumers confidence they are “not getting ripped off” by Fonterra.

Key this morning rejected claims by farmers that plans to force the dairy giant to provide five per cent of its raw milk to independent producers, up from three per cent, was sending profits offshore by assisting largely foreign-owned New Zealand-based exporters which compete with Fonterra.

Labour’s primary industry spokesman Damien O’Connor has voiced similar concerns. …

Key today said proposed provisions to phase out well-established competitors would alleviate concerns about overseas-owned companies profiting at Fonterra’s expense.

It was in Fonterra’s interest to have competition in the market.

“It’s very important that we have transparency because Fonterra find themselves primarily in a monopoly position, they control about 95 per cent of raw milk production in New Zealand,” he told TV3’s Firstline programme. …

Fonterra chairman Sir Henry van der Heyden has said it is valid for Fonterra to assist domestic market suppliers with milk, but requiring Fonterra to supply overseas-owned competitors “defied logic”.

The extra milk obligation would cost Fonterra $200 million over three years alone, he said. …

Dairy farmer James Houghton, a Fonterra supplier and president of Waikato Federated Farmers, said if Fonterra lost money, farmers’ payouts would be affected.

“I believe it is the Government wanting to control an industry it doesn’t need to control,” he said. “The more rules and regulations, the more control it has.

Hmmn, an interesting situation. On one side you have the Government and on the other side you have Fonterra and Federated Farmers, with some opportunistic backing by Labour. So is the Government doing the right thing or not?

Former Green MP Sue Kedgley, who was a member of the parliamentary select committee looking into milk pricing last year, said the proposals were good steps.

Well that solves it for me. The Government must be wrong!

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