Rahui Katene - Dairy Industry Restructuring Second Reading
te-pati-maori
Tue May 03 2011 12:00:00 GMT+1200 (New Zealand Standard Time)
Rahui Katene - Dairy Industry Restructuring Second Reading
Tuesday, 3 May 2011, 4:46 pm
Speech: The Maori Party
Dairy Industry Restructuring (New Sunset Provisions) Amendment Bill, 2R
Tuesday 3 May 2011, 3.45pm
Rahui Katene, MP for Te Tai Tonga
A fortnight ago, in Rotorua, at the New Zealand Dairy Business Conference Waikato Tainui's Te Arataura chairman Tuku Morgan told delegates that farmers and iwi shared an inter-generational interest in the land and what it produced.
He went further and laid a simple challenge to the industry - Work with us - work with iwi across the country in a genuine partnership.
In his korero, he referred to Maori cultivation of the land prior to its alienation and seizure. He brought out also the critical role that Princess Te Puea played in establishing New Zealand's dairy industry when she bought land and began building a dairy herd in the 1920s.
Mr Speaker, this Bill, the Dairy Industry Restructuring (New Sunset Provisions) Amendment Bill, threatens to disrupt this relationship by introducing uncertainty around Subpart 5 of Part 2 of the Dairy Industry Restructuring Act 2001.
This subpart is the one which promotes the efficient operation of dairy markets in New Zealand by regulating the activities of Fonterra to ensure New Zealand markets for dairy goods and services are contestable.
The Bill states that it will provide for a new process for the expiry of the pro-competitive measures when the new specified market thresholds are reached. The new legislation effectively empowers the Minister of Agriculture to forcibly enact the expiry of this Subpart in the event that the threshold is met.
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So why is this such a concern?
Let me go back to the points raised by Tuku Morgan.
A Review of the Maori Commercial Asset Base for Te Puni Kokiri in November 2003 showed there were 436 Maori authorities with substantial businesses. What we know also is that in farming an area of 720,000 hectares worth an estimated $7.5 billion, Maori are the largest natural grouping of pastoral farmers in New Zealand.
In fact given the collective nature of their land holdings and the number of shareholders they support, there’s also a strong case for saying they’re the most sustainable farmers in New Zealand.
Mr Morgan’s challenge to the dairy sector was to take the relationship between iwi and farming to a new level.
He promoted the urgent need to recognise Maori concepts associated with the land, such as tikanga (heritage), kaupapa (conceptualisation of Maori knowledge) and kaitiakitanga (guardianship) to work together and create a more environmentally, culturally and socially sustainable dairy industry.
Enter on the scene, Miraka.
Miraka Limited is a new entrant to the dairy processing industry and is constructing a plant at Mokai, in the heart of Waiariki - 30km northwest of Taupo.
It will commence operations in August 2011.
Miraka is backed by group of Māori trusts and incorporations that have a combined asset base of over $1 billion. These organisations include Wairarapa Moana, Tuaropaki Trust, Waipapa 9 Trust, Hauhangaroa Partnership, Tauhara Moana Trust, Huiarau Farms and the Maori Trustee is also an investor.
As a majority Māori-owned-and-controlled-dairy-company, Miraka is here for the long-term. Miraka’s owners share a vision of sustainable business practices, securing long term returns for current and future generations, from land that will never be sold.
And yet, if this legislation proceeds unchallenged, it well may be that the unique partnership that Miraka can bring to the dairy sector is compromised, in fact sacrificed under the possibility of a restricted public market.
In the current arrangements, there are consistencies between the current Subpart 5 of the Dairy Industry Restructuring Act 2001 and the kaupapa of rangatiratanga, as the current subpart provides for effective regulation and transparency of Fonterra’s activities within the dairy industry.
So it ensures that, despite its dominant market position, Fonterra operates in an environment that is contestable, such that it faces potential competitive pressure.
But what this legislation proposes to do, is to provide for the subsequent expiry of Subpart 5 of the Dairy Industry Restructuring Act to be timed to enable any future government to review and/or amend, if required, the pro-competition provisions of the Act to meet policy objectives at the time.
In short, Mr Speaker, what various dairy operators in the sector are telling us that it is unwise to leave the door open in a way that may expose the dairy industry, and independent processors such as Miraka, to an unacceptable level of risk.
As the House will know there is currently a significant amount of attention on the dairy industry, particularly relating to:
• Fonterra’s capital restructure proposal;
• The review of the Raw Milk Regulations;
• The domestic retail price of milk; and
• The way in which Fonterra calculates the price it pays its farmers for milk - known as the farmgate milk price.
The Maori Party is acutely aware of the heightened levels of public concern about the level of competition in the domestic market, as well as claims of anti-competitive behaviour by Fonterra, and the effect these have on the price of milk.
Now I want to acknowledge the initiative that was taken by the Commerce Commission in undertaking some preliminary work to determine whether a formal investigation into the price of milk is warranted.
That was great news to our constituency.
The Maori Party had called for a Commission investigation into milk prices because of the claims that Fonterra had an effective monopoly in collecting over 90% of the milk produced in New Zealand.
The advice that we’d received from consumers and dairy producers alike was the concern related to the proposed share trading proposal in that it would sacrifice a fundamental principle which guarantees farmers easy entry to, and exit from, Fonterra, the world's biggest dairy exporter.
As is now well known of course, the Commerce Commission decided it will not hold an inquiry into milk prices, but did suggest that it was open to hearing arguments.
Mr Speaker – this debate has ranged far and wide across the impacts and effects of the dairy industry legislation.
And while one might say that this legislation, is not specifically focused on the Fonterra’s plan to introduce share trading among its farmers I have to say that there is simply too much uncertainty around to be able to agree to repeal and replace the provisions which promote the open markets.
This Bill is being read in a volatile environment. We know that the Federation of Maori Authorities, for instances, has indicated concerns around the Ministry of Agriculture and Forestry’s discussion paper on a regulatory regime to accompany Fonterra Capital Restructuring.
The underlying premise in this legislation is that there is unlikely to be sufficient competition in the dairy industry to ensure the efficient operation of New Zealand dairy markets.
And yet, as FOMA will tell us, there is significant scope to not only lift the performance of dairy producers, as well as to also build on linkages between producers, processors and marketers to capitalise on value chain opportunities within the dairy industry.
We agree with FOMA that an open entry and exit mechanism is essential for a competitive dairy market.
We also believe that a full and informed investigation needs to be completed by the Commerce Commission before we can be in a position to support this Bill going through.
To this end, we cannot support this Bill at its second reading.
ENDS
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