They want complete repeal of the open entry and exit rights of dairy farmers to supply Fonterra.
The Dairy Industry Restructuring Amendment Bill has been referred to the Primary Production Select Committee for consideration.
Agriculture Minister Damien O’Connor said in the first reading to Parliament that the dairy industry earns one in four export dollars and provides jobs and income for more than 40,000 workers.
“I know its reputation for being hard-working, enterprising and innovative is well deserved.”
The bill contains a package of measures to ensure the DIRA regulatory regime operates in the longer-term interest of dairy farmers, consumers and the wider economy.
The review by the Ministry for Primary Industries was not intended to be a review or critique of Fonterra’s performance or its business strategies or structure.
“It does not direct Fonterra or any other dairy business on corporate strategy or product mix,” O’Connor said.
The amended legislation would give Fonterra some discretion over accepting entry to the co-operative to avoid environmental harm and to use performance criteria on animal welfare, hygiene and unsafe work practices.
The new reality is now less growth in the size of the dairy industry.
The law should ensure Fonterra is not exposed to all the risks and its competitors pick up all the opportunities, he said.
National spokesman Todd Muller said the Opposition believes the time for open entry and exit provisions has finished along with the obligation for Fonterra to help more stainless steel at scale to become established.
It is not right Fonterra is still obliged to supply raw milk to large-scale new processors so they can compete in world markets.
National will oppose the legislation and he hopes there will be productive debate at the select committee.
Hamilton East MP David Bennett, National, argued O’Connor had said the Government does not trust Fonterra and it knows better than the company what should happen to farmers, their assets and future generations.
“If the Government truly believed what it said about environmental outcomes and sustainability and wanting to have value-added products it would let Fonterra set signals and make the decisions about who supplies.”
Climate Change Minister James Shaw welcomed the environmental constraints Fonterra would be able to put on new milk supplies.
“In the past you had a regulated environment that enabled investors to force dairy conversions, get a guaranteed buyer for their product, create the processing infrastructure and cause environmental havoc in places that were completely inappropriate for dairy farming.”
During the committee hearings he will be looking for assurances the bill will deliver the changes being sought or the Green Party might be open to freeing up Fonterra more.
Other National speakers, including former Fonterra employee Nicola Willis, called for more changes to the open entry and exit provisions, saying farmers who leave shouldn’t have a right to go back if their new supply company didn’t deliver.
Lawrence Yule, MP for Tukituki, said farmers can leave but Fonterra has to preserve excess processing capacity in case they come back.
