Another look at dairy Act

The Government is seeking submissions on the soon-to-expire Dairy Industry Restructuring Act, which creates competition in the dairy industry.

The legislation was passed in 2001 to create Fonterra and ensure the dairy company supplied up to 600 million litres of raw milk a year to competing processors at an agreed price.

The legislation is due to expire and the Government is considering whether to modify it or extend all or part of it.

Some of the regulations which set the price competitors must pay Fonterra for milk have already been amended after lobbying by Fonterra, which claimed the price competitors paid was too low and acted as a subsidy.

An amendment before a select committee would set a price based on the milk component of Fonterra's payout plus 10c a kg of milk solids.

If passed, the new regime would come into effect in the 2010-11 season.

In a discussion document, the Ministry of Agriculture and Forestry said the review was on the Act's pro-competition regulations and the raw milk regulations, which set the volume of milk Fonterra must supply and the formula for setting the price.

Maf lists options as allowing the Act and the raw milk regulations to expire as already provided for (but with the option of phasing out the regime or terminating it abruptly), for the Act and the raw milk regulations to be extended, or just the raw milk regulations.

Submissions close on February 12 and Maf is expected to report back in the first quarter of next year.

 

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