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O'Connor: Proposals for vital dairy industry act

Fuseworks Media
Fuseworks Media

Minister of Agriculture Damien O’Connor today announced plans to introduce a new Bill to prevent the efficiency and contestability provisions of the Dairy Industry Restructuring Act 2001 (the DIRA) from expiring in the South Island.

"This Bill will be introduced to provide certainty for the dairy industry about the regulatory regime after 2018," says Mr O’Connor.

"The Government also intends to undertake a comprehensive review of the DIRA as a matter of priority and will consult fully with the dairy sector on further policy decisions in 2018.

"This will allow a more strategic focus to be taken to issues facing the dairy industry, including, for example, environmental issues, land use and how to achieve the best outcomes for farmers, consumers and the New Zealand economy."

The DIRA was passed in 2001 to manage Fonterra’s dominant position in dairy markets, until sufficient competition emerged.

The DIRA therefore contains automatic expiry provisions that were triggered in 2015, in response to Fonterra’s reduced market share in the South Island.

Key efficiency and contestability provisions in the DIRA will expire in the South Island on May 31, 2018, if the DIRA is not amended beforehand.

A report from the Commerce Commission, published in 2016, found that competition was not yet sufficient to warrant the removal of the DIRA provisions.

The Government considers that the Commerce Commission’s findings remain valid and the DIRA provisions should be retained, pending further review.

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