NZ won't join an 'Opec' for milk producers - Fonterra

The world's biggest dairy exporter, Fonterra, says it wouldn't consider the kind of Opec-style industry grouping which the Irish Dairy Board has been urged to set up globally to represent milk producers.

"Cartels are illegal - we cannot co-operate with other sellers on price," said a spokesman for Fonterra, which sells nearly 40 percent of the world's internationally-traded milk.

The Organisation of the Petroleum Exporting Countries (Opec), is a cartel of 12 countries made up of Algeria, Angola, Ecuador, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, the United Arab Emirates, and Venezuela. It was set up 40 years ago to coordinate oil prices.

Asked whether Fonterra envisaged its global internet auctions of dairy product as providing many of the benefits - in terms of providing more efficient marketing - that some other exporters might look for a cartel, it said the globalDairyTrade sales established a transparent and trusted price discovery mechanism and an efficient channel of trade.

"We are in discussions with other sellers to determine their interest in selling dairy products on globalDairyTrade," said the spokesman.

At the Irish Co-operative Organisation Society's national conference Irish Dairy Board chief executive Kevin Lane was asked by an Irish farmer cooperative delegate, Hugo Maguire, to pursue the possibility of setting up a global group similar to Opec to represent milk producers, with other big international companies or state agencies.

Mr Maguire asked Mr Lane if it would be feasible to link up with international dairy marketing giants like Fonterra in New Zealand and Campina in Europe to meet the challenges from multinational retailers, the Irish Times reported.

"We should try set up an organisation to do what the oil producers do in Opec for milk producers and processors worldwide," he said.

Mr Lane said he was in the process of meeting other major global marketing companies on a range of issues and it was possible the issue might arise.

Fragmented marketing of Irish dairy products internationally was costing money and a unified marketing arm was needed rather than individual companies competing in markets and driving down the price.

He also predicted the Irish industry's target of boosting its milk output by 50 percent over the next 10 years would cost over 800 million euros ($NZ1.48 billion), with half of that coming from processors.

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1 Comment & Question

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It seems to me that all Ireland wants to do is to jump on the coatails of our biggest and most succesful company.
The only thing a milk cartel would do is pull down our prices so as others would benefit.
I can not remember the Irish inviting us to join a potatoe or a beer cartel.
I think it is our turn to have some days in the economic sun - watery though it appears at the moment.

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