Choudhary Ashraf: Dairy Industry Restructuring (Raw Milk Pricing Methods) Bill — Third Reading 
Text is incorporated into the Bound Volume 
Choudhary Ashraf: Dairy Industry Restructuring (Raw Milk Pricing Methods) Bill — Third Reading 
[Sitting date: 30 March 2010. Volume:661;Page:10149. Text is incorporated into the Bound Volume.] 
Dr ASHRAF CHOUDHARY (Labour) 
: 
 I will continue the discussion we had last night on the Dairy Industry Restructuring (Raw Milk Pricing Methods) Bill. First I thank Minister Nick Smith who in the nick of time made a change to a recommendation in the bill on behalf of the Minister. The bill was to come into force by 1 April which is today but at the last moment last night at a few minutes before 12 the Minister put forward an amendment to amend that and we are now able to pass the bill today. 
Secondly I am delighted that he answered some of the concerns raised during the select committee process by submitters who thought that the auction system might not be fair to processors particularly to the smaller players like Green Valley Dairies and Cadbury’s. They were concerned that the auction system might not be fair and equitable for them. I am glad that the Minister explained that last night and in particular the fact that over 300 auctions per week are likely to take place. That is a lot of auctions and there is always concern that the system may not be suitable for the small players who are processors. 
This morning I want to discuss one point that I think has not been raised in the discussions so far. My colleague mentioned how overseas buyers are interested in our dairy farms and our dairy industry. Chinese Russians Singaporeans and other interests want to buy into our dairy industry. I particularly with my science background can understand what is going on here. Milk is a highly sought-after bio-material. It is a very active bio-material. Those of us who know what is going on at the Fonterra Research Centre—the old Dairy Research Institute—in Palmerston North and across at Massey University know that a lot of research is going on into product development for pharmaceuticals. Let us imagine that upcoming countries like China India and other countries which need this biomaterial for pharmaceuticals will make pills using milk as the base with big industries developing around that. Over time those countries will add value to that product which we have as a commodity at the moment so they are looking ahead in strategic terms so that they can invest in our dairy farms and processing plants to ensure the future supply of their products particularly for pharmaceuticals and other bio-materials. 
I think that we have to be very careful when overseas interests want to buy into our dairy farms and our processing plants. In my view the dairy industry is a strategic asset in this country and we have to make sure that all of Fonterra’s production in particular is kept in our hands so that we can add value in the long term to pharmaceuticals and other products including a lot of drinks. I have had the opportunity to visit the research centre in recent times and I saw that a huge amount of material is being processed from milk into different products. In going forward we should not forget the value of milk; in this country we are lucky that we have the amount of milk we have which can be used as a bio-material for those products. That is an important point to remember. 
We have also heard a number of times that 27 percent of the export market is made up of milk and milk products. I had understood that it was about 25 percent so obviously the percentage has gone up over recent times. Clearly the dairy industry in New Zealand is important for our future and the future of our dairy farmers. We have 10500 dairy farmers and not only their livelihoods but also the livelihoods and incomes of our people in the future will be dependent on the dairy industry as more and more farms are converted to dairying. The demand particularly from Asia is going up so we have to make sure that we are prepared with new technology and a new way of doing things such as the ability to have online auctions for the export of milk overseas. 
Similarly with this bill we are hoping to introduce an auction system—and maybe over time an online auction system—for the excess milk we have. That is 600 million litres at the moment which is 5 percent of the milk Fonterra has for on-sale to small operators. I think it is important that those small processors are happy with the system we put in place. A lot of work has to be gone through in setting up the auction system and I hope there will be good consultation with processors so that they are happy with the milk they buy. Fonterra wants 10c per kilogram of milksolids as a fair seasonal value of milk. Of course some of the operators who are potential processors are not happy with that but clearly there has to be some margin. With those words I commend this bill to the House. 
Bill read a third time.