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Govt says won't reconsider raw milk rules until March

Contributor:
Fuseworks Media
Fuseworks Media
David Carter
David Carter

Wellington, Oct 13 NZPA - Agriculture Minister David Carter says he will not review the raw milk regulations -- governing Fonterra and the extent to which it supplied rival processors -- until March next year.

When Mr Carter earlier this year unilaterally changed the triggers for Fonterra to escape some of the obligations under its enabling legislation, the Dairy Industry Restructuring Act (DIRA), some of the cooperative's farmers strongly questioned why dairy companies -- many of them with overseas shareholders -- should continue receiving milk from their vats, effectively at cost price.

Today Mr Carter said the Government "shares some of these concerns" but will consider them fully in a broader review of the 10-year-old regulations.

"It is now appropriate to review the raw milk regulations to ensure that they remain fit for purpose," he said today.

"This is likely to consider more than just the eligibility criteria and include the whole range of provisions under the regulations."

Fonterra today welcomed the announcement by Mr Carter.

"The dairy industry has moved on since the regulations were put in place 10 years ago, and we are looking forward to participating in the review," said Fonterra chief executive Andrew Ferrier.

His chairman, Sir Henry van der Heyden, earlier this year called on the Government to bring forward its promised rethink of the obligation on Fonterra to provide millions of litres of milk to competitors which already have their own supply.

Mr Carter had promised the work for late next year after ministry officials first worked on the law changes needed for the introduction of share trading between farmers next year, but Sir Henry questioned why the ministry could not work on both issues simultaneously.

"The key thing for me is why should we have to keep on selling milk to these companies when they have their own milk supply?" he said at the end of August.

"At the end of last season when we had drought we didn't have enough milk for our own factories which is a nonsense."

Fonterra is required to sell up to 600 million litres a year to other processors, which can order up to 50 million litres each at 10c/litre above the market price for raw milk, and in the current season it expects to supply 583 million litres, with industry observers predicting orders for 650 million litres or more next season.

Mr Carter said that while the raw milk review was a "priority" for the Government, his primary focus remained on working with Fonterra on its capital structure changes.

He warned yesterday that Fonterra needs to avoid any hiccups in timing of its capital restructure if it is to have a new regulatory regime in time for November 2011.

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