Raw milk changes proposed

Fonterra is proposing changes to the raw milk regulations which it says will ensure processors supplying New Zealanders with dairy products "get their fair share" of regulated milk.

Submissions closed on Friday on the rules under which independent milk processors could access raw milk from Fonterra.

The review covered such issues as how much regulated milk independent processors should have access to, and for how long, and the total volume of regulated milk that should be made available each year.

It did not cover the farm gate milk price, or the design of a regulatory regime around Fonterra's trading-among-farmers proposal.

Fonterra proposed changes aimed at.-

• Ensuring processors who supply dairy products to New Zealand consumers continue to get their proper share of regulated raw milk.

• Preserving domestic competition.

• Getting rid of outdated rules that were being "gamed" to the advantage of some processors exporting products and profits offshore.

When the raw milk regulations were developed in 2001, support for competition in domestic dairy markets was considered vital, Fonterra director John Monaghan said.

The regulations were designed so that food and beverage producers who did not have their own farmer-suppliers were able to buy raw milk at a regulated price.

In 2001, protecting an entrance pathway for independent processors into the raw milk market was considered to be valid. But times had changed and the regulations no longer worked that way, Mr Monaghan said.

Fonterra's submission sought two immediate changes by introducing eligibility criteria that would see large commodity processors with their own established milk supply excluded from regulated milk, and a "no gaming" principle which would prevent large commodity processors from accessing regulated milk in the future.

Fonterra Shareholders Council chairman Simon Couper understood there were "many hundreds if not thousands" of submissions from Fonterra farmers.

Describing it as an unprecedented response, particularly during their busiest time of the year, it showed "just how much this means to them".

The issue was critical to farmers. They were frustrated the rules were not working as intended and were not helping to drive competition at the farm gate, Mr Couper said.


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