The Minister of Agriculture has challenged a claim by American dairy interests that the Government is backing moves by Fonterra to strengthen its hold on the domestic and international dairy trade.
The US Dairy Export Council has written to the minister, David Carter, complaining about Fonterra's proposal to allow share trading among its farmer shareholders.
The council agrees with some of Fonterra's smaller competitors that the move would make it harder for farmers to leave the giant co-op, if they wished to sign up with another processor.
It says the proposal would undermine the open entry and exit provisions in the Dairy Industry Restructuring Act, which was designed to provide some measure of competition for Fonterra.
And it says it views the move as an attempt to lock in Fonterra's near-monopoly in New Zealand and use that dominance to capture an unfair share of foreign dairy markets.
It's not a monopoly - minister
Mr Carter says however that Fonterra is not a monopoly and that the changes made to dairy marketing when it was formed nine years ago were specifically designed to get rid of the former Dairy Board export monopoly.
He points out that since that time, a number of new dairy companies have emerged in New Zealand.
If Fonterra's shareholders approve the trading plan at a special meeting next week, Mr Carter says, the Government will consult all dairy industry stakeholders to decide how the regulations should be modified.
Federated Farmers' dairy chair, Lachlan McKenzie, a Fonterra supplier himself, dismisses the view that the share trading plan will make it harder for farmers to leave the co-op.
