Government Responds To Dairy Industry Proposal

Food and Fibre Minister John Luxton has welcomed today's proposal for restructuring the Dairy Industry but cautioned that there is still work to do on the detail.

"The Government welcomes the work that the Dairy Industry has been doing over the past 12 months to plan for its future. We wanted the industry to focus on its future challenges and have encouraged the debate," Mr Luxton said.

"The plan that the industry is developing is a major step forward but will raise significant public policy questions which the Government and industry must work through.

"A mega co-op for dairy controlling the great bulk of New Zealand's milk processing and exporting would be the single largest company in New Zealand. Change has to be in the farmers and the country's interests to be supported by government.

Any structure in the industry that would mean farmers potentially had little choice as to where they could sell their milk would raise significant questions. There is also the need to recognise the rights of New Zealand consumers as well. We will need to work through many questions, including:

• the overall impact on farmers, consumers and the whole economy; 
• what pressures a mega co-op would face to perform efficiently?
• what ability farmers would have to realise the value of their investment? 
• what protections would be in place to safeguard the interests of small scale suppliers and minority shareholders? And 
• whether or not the statutory provisions are expected to continue as a feature of this plan?

"The Government will work with the industry to address these and any other issues. The Government's goal is to ensure the industry generates increased incomes for dairy farmers and for the New Zealand economy."

"The Government is pleased that the process that was announced in last year's Budget in terms of planning for the future of these major and important industries is taking a major step forward today, with the announcement by the industry of its plan."

"Over the coming months, we will work closely with the industry to address these issues in the transition to a normal commercial environment," Mr Luxton concluded.