New Zealand dairy giant Fonterra has called for a change to milk collection rules in its home market.

In its submission to a review of the country’s Dairy Industry Restructuring Act (DIRA) seen by just-food, the cooperative made the case for an end to the so-called open entry rule whereby it has to collect milk from any shareholding farmers who want to supply it in its collection area.

Go deeper with GlobalData

Premium Insights

The gold standard of business intelligence.

Find out more

Related Company Profiles

View all

In its 66-page submission it accepted DIRA has been critical to the performance of the New Zealand dairy sector since its passage in 2001. 

“The formation of Fonterra has created wealth for New Zealand, and has improved social and economic outcomes for New Zealand’s dairy farmers and their communities,” it said.

But it added: “DIRA has now achieved what it set out to – create competition. Today farmers have choices in who they supply their milk to and New Zealand consumers have many choices when purchasing dairy products.

See Also:

“For the dairy industry to continue to succeed, some aspects of DIRA must be modernised.”

How well do you really know your competitors?

Access the most comprehensive Company Profiles on the market, powered by GlobalData. Save hours of research. Gain competitive edge.

Company Profile – free sample

Thank you!

Your download email will arrive shortly

Not ready to buy yet? Download a free sample

We are confident about the unique quality of our Company Profiles. However, we want you to make the most beneficial decision for your business, so we offer a free sample that you can download by submitting the below form

By GlobalData
Visit our Privacy Policy for more information about our services, how we may use, process and share your personal data, including information of your rights in respect of your personal data and how you can unsubscribe from future marketing communications. Our services are intended for corporate subscribers and you warrant that the email address submitted is your corporate email address.

The dairy group suggested open entry had several downsides, including the risk of industry-wide over capacity which could lead to lower returns.

Fonterra said it would, alternatively, support the removal of open entry in regions where its market share dropped below 75%, as well as for new conversions and applications it felt were unlikely to meet its terms of supply. 

Its submission on the DIRA review was one of 188 received by the Ministry for Primary Industries (MPI), which will review them and develop policy recommendations for the New Zealand government. 

The government will then decide whether any law changes should be made as a result of the review.