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Open Country Calls For Government To Safeguard An Essentials Industry

Fuseworks Media
Fuseworks Media

04 September 2009: Greater recognition of dairying as an essential industry should become a priority for Government to protect the threat of wildcat industrial action.

That is the view of Laurie Margrain, Chairman of New Zealand's second largest milk processor Open Country, which has been issued with a Strike Notice at its Waharoa plant near Matamata by the New Zealand Dairy Workers Union.

Mr Margrain believes it is in the country's best interests to ensure that greater protection should be provided for dairying, and milk in particular, "which can't sit and wait to be processed because of strike action".

He says Open Country is also critical of the Dairy Workers Union timing to issue a strike notice "just as dairy companies are nearing peak capacity".

Mr Margrain says negotiations opened with the Union, which entered the site eight weeks ago, demanding a 46% labour cost increase. "Despite our best efforts to indicate the serious financial circumstances facing the entire industry (processors, farms and staff) talks broke down last week, with the Union still demanding a suite of changes that would increase labour costs by over 15%," he says.

He claims the current industrial action taken by the Union lies outside of the 'good faith bargaining model' and has been specially timed to target the most vulnerable period in the industry when milk is at peak production. "Milk is a perishable product, it can not be stored and farmers can not stop milking," he says. "Forcing Kiwi farmers to negotiate with unions under the threat of industrial action is akin to holding a gun to their head".

Open Country also believes Government should recognise New Zealand essential industries in labour negotiations. "The dairy industry is extremely and disproportionately vulnerable to industrial action," says Mr Margrain. "Milk is a unique case and needs unique protection. The Government must step in."

Mr Margrain says the law, which currently prohibits companies from replacing striking workers with other labour, is an unfair restriction for dairy processors given their unique circumstances, the environmental consequences and national economic importance of their product.

Suppliers and farmers have quickly rallied around to support Open Country with suppliers vowing to keep the milk flowing despite union threats to strike, with a farmer Brendan Barrett, saying the Union's approach is "outrageous" given the perilous state of the industry.

"How the Union can credibly claim anything other than the status quo is beyond me," says Mr Barrett. "Suppliers have just had a 35% pay cut this year and forecast another 15% drop this coming year. Our own returns have fallen 50% and yet the Union is demanding huge labour cost increases.

"I take my hat off to Open Country for standing up to the Union. Too often the industry gives in to strike threats and unrealistic claims and when they do that they sell farmers and New Zealand's competitiveness down the drain".

Matamata farmer Henk Smit says, "It's obvious the Dairy Workers Union is using the onset of peak milk in a few weeks time to extort a settlement. The timing of this strike notice is no coincidence.

"Open Country has been pretty up front - we all know that their cost structure affects their ability to pay suppliers. We will assist them in any way we can," says Mr Smit. "We have no interest in been backed into a corner or spilling milk as a result of Union tactics. We are happy to help out if needed - right now the industry needs to club together more than ever."

Open Country, established in 2001 following the Dairy Industry Re-structuring Act (DIRA), operates sites in three key dairying areas - Waharoa (Waikato), Wanganui and Awarua (Southland) and exports to 45 countries worldwide. Its three sites, supplied by more than 500 independent dairy farmers, have a combined capacity of around 800 million litres of milk per annum. NOTE: Open Country has email evidence of collusion between Fonterra Dairy Workers Union representatives supporting the planned strike action.

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