1 Mar 2012

Farmers share Fonterra's milk regulation review concerns

8:00 am on 1 March 2012

Farmers are echoing concerns raised by Fonterra over Government reviews of milk price setting and dairy legislation.

The Ministry of Agriculture and Forestry has received more than 800 submissions on the way Fonterra sets the farm gate milk price, the raw milk regulations and law changes needed to cover Fonterra's share trading among farmers (TAF) plan.

As well as dairy processors and other food companies, Consumer New Zealand and the Federation of Maori Authorities have also commented on proposed changes.

But most submissions have come from farmers concerned about the regulations requiring Fonterra to supply milk to competing processors.

Farmers support MAF's proposal to put a three year limit on supplying independent processors, and many want the amount to be progressively reduced each year.

There's overwhelming support for starting that process straight away for established processors to wean them off regulated milk.

Most submissions also share Fonterra's concern about the potential for shell companies or virtual processors to be set up, allowing independent processors to continue taking milk beyond the three year limit, or get more than their 50 million litres maximum each season.

Many submitters proposed that processors taking regulated milk should only be able to use it to supply the domestic market.

They are concerned about independent processors with foreign owners using the milk to compete against Fonterra in offshore markets and taking profits out of New Zealand.

MAF proposals to tighten up monitoring of Fonterra's price setting procedures attracted a relatively small number of submissions, with mixed views.

Despite farmers' concerns about aspects of Fonterra's trading among farmers plan, few of the submissions to MAF have commented on it.

Those who did comment on the share trading plan said they want more time before the scheme is in place or they want a second vote on it.

Fonterra has ruled out a second vote but will continue with shareholder meetings around the country to discuss the TAF proposal.

It also told farmers on Wednesday it would support their option of a farmer-trust custodian for the main sticking point of TAF, the shareholders fund.