The Dairy Industry Restructuring Amendment Bill (No 3) proposes changes to how Fonterra, New Zealand’s largest company, is regulated.
It aims to ensure that New Zealand’s markets for dairy goods and services remain efficient.
What is this bill about?
The bill seeks to amend the Dairy Industry Restructuring Act 2001 (DIRA). It follows a major review that looked at how well the DIRA’s regulatory system is working in light of changes in the dairy industry.
The DIRA was passed in 2001 to enable the formation of Fonterra. Since Fonterra would have a near-monopoly over the local dairy market, the Act set rules to regulate Fonterra’s dominant position and help new competition enter the market.
The review into DIRA concluded that continued regulation of Fonterra is needed to promote the efficient operation of New Zealand’s dairy markets, but some changes are also needed.
What does this bill mean?
The bill proposes to change the DIRA regime to:
- allow Fonterra to refuse milk from farmers if it:
- does not meet Fonterra’s environmental, employment, or other standards
- comes from newly converted dairy farms (this allows Fonterra to plan ahead with certainty of supply)
- make it clear that Fonterra can consider the environment, animal welfare, health and safety, and other matters in the terms and prices it offers farmers
- limit Fonterra’s discretion in calculating the base milk price
- require Fonterra to appoint one member of its milk price panel on the Minister’s recommendation
- reduce the requirement on Fonterra to support independent processors with raw milk
- update the terms on which Fonterra supplies milk to Goodman Fielder (the only other large supplier of fresh milk to domestic consumers).
The bill would also provide for the DIRA to be reviewed every four to six years.
Who might this bill affect?
Fonterra and its dairy farmer shareholders
Producers and processors of dairy products
Current and future stakeholders in New Zealand’s dairy industry
What happens next?
The bill was introduced on 27 August 2019 and referred to the Primary Production Committee.
The progress bar below shows which stage the bill is currently at.
Dairy Industry Restructuring Amendment Bill (No 3) – First Reading – Video 14
Progress of the bill