Fonterra and farm leaders gripe at O’Connor’s DIRA decision – Greenpeace is even more grouchy

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.





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