26 Jan 2012

Raw milk proposals 'bad for new companies'

2:03 pm on 26 January 2012

Fonterra's biggest domestic competitor says proposed changes to raw milk regulations would make it nearly impossible for new dairy companies to join the industry.

Following a Ministry of Agriculture review of raw milk regulations, the Government has proposed a raft of changes, including requiring the country's largest dairy co-operative, Fonterra, to share more of its milk with independent processors.

But it's also proposing to limit the supply to independents to three seasons once those companies arrange their own milk supplies.

At present, Fonterra supplies about 3% of its milk supply - close to 600 million litres - to independent processors.

Open Country Dairy purchases 50 million litres of milk a year from Fonterra, the maximum it is allowed.

Its chairman, Laurie Margrain, says the Open Country could survive without Fonterra milk because it is has been operating for eight years and is fully established.

But he says newer companies wouldn't cope, as an effective competitor in the marketplace in the three year time period.