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Speech On Dairy Industry Restructuring Bill

Fuseworks Media
Fuseworks Media
Hone Harawira
Hone Harawira

Hone Harawira, Maori Party Member of Parliament for Te Tai Tokerau. Thursday 1 April 2010:

This Bill to allow milk to be allocated through an auction process sounds technical, but it also allows us to acknowledge the opportunity for Maori in the primary sector.

Maori dairy farmers own an estimated 100 million shares in Fonterra with some of the major players in the sector being large Maori incorporations, directly accountable to their people, and Māori skill acquisition, research and innovation within the sector will be essential to gaining added value from existing Māori assets and interests in agriculture (dairy, meat), horticulture, forestry, and aquaculture.

I understand that this Bill it is basically an exercise in restructuring contracts via an auction, putting the onus on buyers to set the new price range for contracts, and helping all players get a 'snapshot' of potential new prices set by the market itself, which will help in how the market sees, and values itself, and help determine consumer patterns, and that the stated intentions of the Bill are:

* to achieve a decent price for regulated raw milk as soon as possible,

* to ensure excess demand for regulated raw milk is managed efficiently, and

* to remove uncertainty regarding the price of regulated raw milk.

But it seems that even with one clear purpose there are still very strong and differing responses from across the sector.

At one end we have Parininihi ki Waitotara who support the principle of the Bill - mind you, Parininihi is a Fonterra supplier, and has been subsidizing Open Country, Synlait and others to date for milk they take under the 2001 Dairy Industry Restructuring Act.

At the other end there's Green Valley Dairies who oppose it because they think the proposed auction system will create ambiguity in an already volatile raw milk market, and Tatua Co-Op Dairy Company who said the Bill should be abandoned or at least delayed, until there is greater clarity about the likely outcomes.

And in the middle we have the Open Country Dairy Company who don't think the Bill will deliver on the expectations of the 2001 Act, but will comply with the new law because regulated milk is a only a small part of their operation.

Mr Speaker, on another level, I think it also worthy to note that one of the interesting features of the 2009 economic situation, was that Maori dairy farmers thought they would be less likely to be affected by the forecast drop in milk payouts than non-Maori farmers, and I recall Rino Tirikatene, CEO for the Federation of Maori Authorities, saying that it was because Maori farmers gearing and debt ratios were more conservative than non-Maori (10-15% of the value of the asset for Maori as opposed to 60-70% for non-Maori), something my colleague Te Ururoa Flavell, spoke about last week in the debate around the Securities Trustees.

So, instead of struggling to service debt, Maori farmers were able to focus on feed strategies to stay afloat during the tough times.

Clearly, being able to be self-sufficient and relatively undamaged by debt burdens, means that Maori farmers are less likely to be forced into mortgagee sales - a very strong feature of the Maori dairying sector that the whole New Zealand Dairy Industry would do well to emulate.

Finally Mr Speaker, I'd like to step outside of the milking shed for a minute to look at the broader issue of the affordability of food and dairy products to ordinary Kiwis, because although the CPI suggests essential food prices will fluctuate from time to time, the trend is ever increasing prices, regardless of auctions that may affect dairy farmers and their incomes.

Statistics New Zealand say food prices went up 2.1% in January alone, with higher prices for grocery food, fruit, vegetables, meat, poultry and fish, an ideal opportunity to promote my colleague Rahui Katene's bill calling for healthy food to be exempt from GST, because in fact it seems that it's poor people who are in danger of being "priced out" of the market.

The research confirms the high rates of child poverty, poor living conditions and health status of children in low income families, and we note that during the last 3 years, food prices have gone up more than 20% (indeed, increases for the staples of a nutritious diet - such as fruit, vegetables and milk - have been particularly high) while real incomes have risen only very slightly.

It is because of these massive changes that the Maori Party is supporting Rahui Katene's call for GST to be removed from healthy foods to make them more affordable, so, while we will support this Bill, we leave a challenge for this House - auction milk prices if you must, but do not auction the wellbeing of all New Zealanders, by failing to recognise the very real impact of these economic decisions on those most vulnerable.

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