A leading farm lobbyist says Fonterra farmers will not be impressed with their milk being used by a new offshore rival to get its export business off the ground."New Zealand must be the only country in the world which penalises its dominant exporter
A leading farm lobbyist says Fonterra farmers will not be impressed with their milk being used by a new offshore rival to get its export business off the ground.
"New Zealand must be the only country in the world which penalises its dominant exporter to benefit a rival start-up," said Federated Farmers dairy chairman Lachlan McKenzie, of Rotorua.
Chinese investors seeking to buy the Crafar family farms have separately sought to source up to 50 million litres of raw milk from Fonterra's farmers, which they will process at Tauranga for export to China as UHT long-life milk.
The Chinese company Natural Dairy (NZ) Holdings can become a dairy exporter even if its backers never buy a cow or a square metre of farmland, because independent processors can seek Fonterra milk under a clause in the Dairy Industry Restructuring Act (DIRA).
Other overseas-backed companies eligible to access Fonterra milk include: Synlait and its shareholder Mitsui (from Japan); New Zealand Dairies and its shareholder Nutritek (from Russia); Open Country Dairies and its shareholder Olam (from Singapore); Britain's Cadbury; and Australia's Goodman Fielder .
Fonterra chairman Sir Henry van der Heyden has previously warned that global food security fears mean more foreign interests are keen to invest in New Zealand.
"If they get a very strong foothold in New Zealand and get a large amount of our milk supply here...we don't believe that would be ultimately the right thing for our farmers and we don't think that would be actually sustainable," he said.
Earlier in the debate, he urged farmers to take concerns they had about Natural Dairy's plans to the government and the Overseas Investment Office, but a spokesman for Natural Dairy suggested Fonterra was "clearly worried" about the potential competition posed by its plans.
Natural Dairy will be exporting 150 million packs of UHT milk, using Fonterra's milk and a Tauranga processor, the company's vice-chairman Graham Chin said yesterday.
A Fonterra spokesman, Alex Duncan, said last night that this was "yet another example of why Fonterra believes that the way in which DIRA is applied, needs to be reviewed".
Fonterra farmers have been loudly complaining about a succession of companies backed by overseas money tapping "cheap" milk from their cows -- but Mr Duncan said: "We are required to supply our competitors with this milk, on a non-commercial basis.
The difficulty was that some rivals became reliant on it and used it to compete with Fonterra in offshore markets. "It makes no commercial sense for Fonterra or New Zealand," he said.
