DIRA Bill will serve the dairy sector well for years to come

  • Hon Damien O’Connor

Legislation to deliver ongoing benefits for New Zealand farmers was passed today, Agriculture Minister Damien O’Connor announced today.

The Dairy Industry Restructuring Amendment Bill amends legislation passed almost 20 years ago to enable the creation of Fonterra and included measures to promote the efficient operation of dairy markets in New Zealand.

“The dairy sector has changed considerably since 2001, so the amendments we have made to this very aged legislation ensure this regulatory regime puts the sector in the best possible position in a post-COVID world,” Damien O’Connor said.

The Government is committed to building a modern and productive economy, and that means having fit-for-purpose legislation. We want to ensure the DIRA remains fit for purpose in a changing economic and social environment, and continues to deliver benefits for our farmers, consumers, and New Zealand’s economy as a whole.

“I’m grateful for the careful consideration given to the Bill by the Primary Production Select Committee.  I’d also like to thank everyone who shared their views and experiences with the Committee.  These have been very useful in guiding next steps.

“Having considered the submissions, the Committee recommended removing the requirement on Fonterra to accept all applications from dairy farmers wanting to become shareholders and supply milk to Fonterra, or re-enter Fonterra after leaving the co-operative. I agree with the Committee on this point.  

“This Government is determined to ensure we move milk up the value chain. This change will enable Fonterra to invest in that higher-value end.

“The new and improved DIRA Bill will serve our dairy sector, and New Zealand, well for many years to come.”

The Bill:

  • Removes the requirement for Fonterra to accept applications to become shareholders, and provides guidance on what it should consider when assessing applications.
  • Provides for a regular review of the DIRA on a 4 – 6 yearly basis, to provide regulatory certainty.
  • Limits Fonterra’s discretion in regard to setting a key assumption in calculating the base milk price (the ‘asset beta’).
  • Requires Fonterra to appoint one member of its Milk Price Panel on the nomination of the Minister of Agriculture.
  • Removes 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.
  • Updates the terms on which Fonterra supplies regulated milk to Goodman Fielder for the benefit of domestic consumers.