15 Nov 2012

Dairy industry says new milk regulations OK

7:07 am on 15 November 2012

Fonterra, farmers and independent dairy companies are comfortable with most of the changes in the Raw Milk Regulations, which require Fonterra to supply up to 5% of the milk it collects to other processors at an agreed or regulated price.

Primary Industries Minister David Carter says the new rules will result in a more efficient dairy market in New Zealand.

He says there are four key amendments to the Raw Milk Regulations, the major one being a three year limit for processors which collect more than 30 million litres of milk from dairy farmers, being able to buy another 50 million litres per year from Fonterra.

Mr Carter says it's been his aim to make the Raw Milk Regulations fair to the industry, to foster competition so that farmers have choice and not to unfairly penalise Fonterra.

He says the new regulations are fair to the industry as a whole.

The new raw milk regulations will take effect on 1 June next year, which is the start of the new dairy season.

Tatua Dairy Co-operative chief executive Paul McGilvary said there were no surprises.

He said the company made significant submissions and asked for a slightly longer transition period than it got, but it was signalled early on that it was likely to be a three year limit.

Mr McGilvary said a longer transition time would be helpful for new entrants to the industry, but it should not unduly affect Tatua.

"We expect that by 2016 the growth in our value-added businesses will certainly outweigh any benefit we get from Fonterra milk and if we require more milk at that point we can go to the market and seek it as the Government is hoping we will do under the regulations," he said.