Fonterra DIRA extension plan slammed

Fonterra, Federated Farmers, and the Labour Party, disagree with Agriculture Minister David Carter’s decision to prolong DIRA’s provisions indefinitely (Fonterra, as the dominant player, has to provide up to 50 million litres of raw milk to virtually any rival processor).

“The Government has missed an open goal to ensure real farmgate competition by prolonging this bias towards the independents,” said Federated Farmers dairy chairman, Lachlan McKenzie. “Federated Farmers believes in competition, but ‘dial-a-tanker’ places little incentive on start-ups and processors to secure their own total and sustainable supply.”

Fonterra chief executive, Andrew Ferrier, said a significant proportion of the 600 million litres of milk supplied annually under the regulations goes to competitors who have their own local milk supply, are increasingly foreign-owned, and are competing with the co-operative in overseas markets.

“All of these competitors use the DIRA regulations to fill their processing plants at times of the year when milk supply is low.

“Essentially, this means Fonterra is helping processors to become more efficient by giving them more flexibility in sourcing their milk.

“It erodes profits back to our farmer-shareholders and the gains are increasingly going back to foreign shareholders.”

The New Zealand Farmers Weekly

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