Fonterra says it has identified some "practical" changes to the raw milk regulations that will help deliver genuine competition for New Zealand milk.
Submissions closed last week on the Government's proposed response to reviews of Fonterra's farm-gate milk price setting and the Raw Milk Regulations.
While the dairy co-operative welcomed Government moves that would see independent processors with their own supply lose eligibility to regulated milk, it said proposed amendments to the regulations needed refinement.
The changes it had identified would help deliver genuine competition which would make both the co-operative and the dairy industry stronger and more efficient, innovative and resilient, chairman Sir Henry van der Heyden said.
Fonterra's submission highlighted three priority issues:Any amendment to the Raw Milk Regulations should require those getting milk to have their own investment in manufacturing plant on the ground to process it.
At present, volume limits could be by-passed by "virtual" processors that were like shell companies with no visible presence or investment in physical assets.
The amendment regulations proposed maximum monthly amounts of regulated milk that independent processors could take, but no minimum, allowing independent processors to take milk in the spring and autumn or avoid the peak months altogether.
Fonterra submitted that independent processors must take at least some milk during peak production months, as was the case now under what was commonly called the "October Rule".
Instead of the proposed "cold turkey" exit from June 1, 2015, which would see established independent processors lose access to regulated milk on that date, Fonterra believed a more carefully programmed exit would benefit all parties.
By phasing down volumes over two years from June 1, 2013, independent processors would be better able to gradually build up their own additional supply base, while Fonterra would have greater clarity for its investment planning.
Fonterra's submission also addressed concerns relating to the increase in the total regulated milk supply cap, and the removal of the 10c per kg of milk solids premium.
