Changes to dairy industry legislation

Minister of Agriculture Damien O’Connor today announced changes to the legislation governing the dairy industry.

“These changes will provide certainty for the dairy industry and ensure the sector can pursue sustainable value growth for the benefit of all New Zealanders,” Damien O’Connor said.

Changes will be made to the Dairy Industry Restructuring Act 2001 (DIRA) and the Dairy Industry Restructuring Raw Milk Regulations 2012 (Raw Milk Regulations).

The DIRA was passed into law in 2001 and saw the creation of Fonterra. It also promotes the efficient operation of dairy markets in New Zealand.

“The industry has changed considerably since 2001, and it is important to ensure the regulatory regime puts the sector in the best possible position,” says Mr O’Connor.

The Government is committed to building a modern and productive economy and that means being smarter in how we work.  

The changes we’re making will support our dairy sector to produce and export high value goods in a way that sustains the environment it relies upon. DIRA drives much of this work and after 17 years it’s the right thing to do to make it fit for the 21st century.

“Following farmers, independent dairy processors, NGOs, and representatives of Maori interests around the country sharing their views, Cabinet this week approved changes to both pieces of legislation. They will now be progressed through Parliament.

“I would like to thank everyone who took part in the process. People will have another chance to have their say on the changes to the DIRA and the Raw Milk Regulations during the Select Committee process and I encourage people to do that. I want to make sure we have a law that is going to work for everyone it affects”.

More information about the proposed changes to the DIRA is available on the MPI website: www.mpi.govt.nz/dira-review

Key Changes to DIRA and the Raw Milk Regulations

  • Retain the open entry and exit provisions, with qualifications, to manage ongoing risks arising from Fonterra’s large size and scale in New Zealand dairy markets.
    • Allow Fonterra to refuse milk supply from farmers in circumstances where milk is not compliant or unlikely to comply with Fonterra’s terms and standards of supply or is supplied from newly converted dairy farms.
    • Clarify that Fonterra’s terms of supply can relate to, and price differentiate on the basis of, various on-farm performance matters, including environmental, animal welfare, climate change and other sustainability standards.
  • Limit Fonterra’s discretion in regard to setting a key assumption in calculating the base milk price, the asset beta.
  • The DIRA shall be reviewed on a 4 – 6 yearly basis, to provide regulatory certainty.
  • Require Fonterra to appoint one member of its Milk Price Panel on the nomination of the Minister of Agriculture.
  • Remove the requirement for Fonterra to supply regulated milk to independent processors with their own supply of 30 million litres or more in a single season.
  • Update the terms on which Fonterra supplies regulated milk to Goodman Fielder for the benefit of domestic consumers