Foreign owned processors milking system - Couper

Fonterra Shareholders’ Council Chair Simon Couper says the New Zealand Government is putting the interests of foreign-owned milk processors ahead of the country’s economy and the New Zealand public.

Proposed changes to the Dairy Industry Restructuring Act (DIRA) Raw Milk Regulations, released by the Government today, allow Fonterra’s competitors access to an extra 200 million litres of Fonterra milk at a cheaper price with no guarantee the extra milk will ever reach the New Zealand domestic market or that the profits remain in New Zealand.

“Competition is good as it ensures our Co-operative stays lean, efficient and competitive however, there is no successful example in economics where a business is forced to subsidise its competitors, says Couper.

“The Government’s legislation proposes that New Zealand subsidise increasingly foreign-owned competitors while doing little or nothing to ensure milk is available to those processors who need it most or who assist the domestic market.

“Fonterra Co-operative has shown a willingness to provide milk where it is needed and ensure milk consumption in New Zealand increases, evidenced by our Milk in Schools and KickStart breakfast programmes.”

Based on 2011/12 projections less than half of the 570m litres supplied to other processors this season will make it to the New Zealand domestic market with approximately 300m litres (53%) forecast to go to Independent Processors who primarily export product overseas.

Of that 300m litres two-thirds is claimed by processors with some level of foreign ownership.

“When one sector of an industry has to subsidise another it creates inefficiencies and false economies.

“This proposed legislation would further fragment the New Zealand dairy industry and weaken New Zealand’s export returns, strengthening our overseas competitors at the expense of the New Zealand economy and the average New Zealander.

“New Zealand needs enabling legislation that brings better returns to New Zealanders. Fonterra Co-operative is responsible for 25% of New Zealand’s export income and as a country we cannot afford to mess with a winning formula.

“It makes no sense to take money out of New Zealanders’ pockets in order to line those of foreign companies who take our resources and give nothing in return.”