Agriculture Minister Damien O’Connor didn’t win too many new friends (and may have lost some) with his decision on the review of the Dairy Industry Restructuring Act, the 2001 legislation which set up Fonterra supposedly to become a “ national champion”.
We all know how that has turned out.
So what were the reactions to O’Connor’s latest move to improve the legislation which initially had the objective of “promoting the efficiency of NZ dairy markets”?.
Fonterra chairman John Monaghan said the company was disappointed it still has to supply milk to large, export-focused businesses.
Federated Farmers dairy industry group chair Chris Lewis was also disappointed because, he said, open entry provisions won’t be changed, except for new conversions.
But the sharpest criticism came from Greenpeace which said that, despite its rhetoric, the government is failing to take the climate crisis seriously. Its spokesperson says:
“We are in the middle of a climate emergency. There cannot be a single new dairy farm added to NZ’s already grossly bloated dairy herd. We urgently need fewer cows.The government should have at least made it easy for Fonterra to reject new industrial dairy conversions, including abominations like the mega-dairy farm in the fragile and iconic Mackenzie country.”
Fonterra itself had lobbied to end the open entry and exit provisions on the grounds the industry is now mature and competition among a host of processing companies is robust enough for them to be dropped.
But O’Connor was probably worried that if he did wipe the open entry requirement, Fonterra could cut off suppliers, particularly those in remote areas where transport costs are high, and leave many heavily indebted farmers at the mercy of their bankers.
The minister does propose, however, to give Fonterra the power to refuse supply when a farmer is well below industry standards relating to the environment, animal welfare, or greenhouse gas emissions.
On the other hand, the government’s proposals will raise Fonterra’s obligatory sales volume of regulated milk to rival Goodman Fielder to 350m litres per season from 250m litres, though at a higher price.
Independent processors with their own supply of 30m litres or more in a single season will no longer be able ask Fonterra for additional regulated milk.
O’Connor also plans to limit Fonterra’s ability to determine a key assumption in setting the base milk price, known as the asset beta. He will be able to nominate a member to Fonterra’s milk price panel.
Fonterra almost certainly choked at that point, but its chairman took the diplomatic line in saying:
“We look forward constructively to participating in the upcoming legislative process and will continue to push for an outcome that is in the interests of all dairy farmers and NZ.”
For its part, Greenpeace says it has become increasingly disappointed with the coalition government’s failure to regulate dairy and agricultural pollution.
“Since it took power in 2017 amid promises to clean up rivers and tackle climate change, this government has not put in place a single new piece of regulation to deal with NZ’s biggest polluter – the dairy industry.”
Greenpeace goes so far as to contend the dairy industry is the single largest climate criminal in the country, emitting more climate pollution than the country’s entire transport fleet.
Never mind that the dairy industry is by far the country’s biggest export earner.