30 Mar 2012

Fonterra council denounces dairy restructuring bill

6:53 am on 30 March 2012

The Fonterra Shareholders' Council says it can't support the Government's Dairy Industry Restructuring Bill which was introduced to Parliament this week.

The council, which represents its 10,500 farmer suppliers, says it can't support the legislation as it's currently written.

Its opposition relates to provisions in the bill covering the process for setting the price of milk paid to farmers.

Fonterra would continue to decide the farm gate price for milk, but the bill would embed the price setting system into legislation and require it to be monitored by the Commerce Commission.

Shareholders' Council chairman Simon Couper says the milk price provisions, over time, run the risk of disintegrating New Zealand's most important and successful export industry.

He says the bill has nothing to do with the retail price of milk, but is about government-regulated committees determining how much farmers will earn from Fonterra's overall business, 95% of which is exported.

Mr Couper says while farmers welcome some parts of the bill, the provisions on how farmers' incomes are to be regulated need to be axed.