Anderton Jim: Dairy Industry Restructuring Amendment Bill (No 2) — First Reading 
Anderton Jim: Dairy Industry Restructuring Amendment Bill (No 2) — First Reading 
[Volume:641;Page:11327] 
Hon JIM ANDERTON (Minister of Agriculture) 
: 
 I move  
That the Dairy Industry Restructuring Amendment Bill (No 2) be now read a first time. 
 At the appropriate time I intend to move that the bill be referred to the Primary Production Committee for consideration and that the committee present its final report on or before 31 October 2007. I thank the members of the Primary Production Committee and its chair in advance for their cooperation. I also intend to move that the committee have the authority to meet at any time while the House is sitting except during oral questions and during any evening after 6 p.m. on a day on which there has been a sitting of the House and on any Friday in a week in which there has been a sitting of the House despite Standing Orders 192 195(1)(b) and 195(1)(c). 
The Dairy Industry Restructuring Amendment Bill (No 2) amends the Dairy Industry Restructuring Act 2001. It provides export rights to 11 designated dairy markets at the expiry of the initial allocation of rights held by the Fonterra Cooperative Group. In this way the bill will complete the transition begun in 2001 to a new industry structure without the export monopoly powers of a statutory marketing board—the New Zealand Dairy Board. It will also provide certainty to all parties in the industry about future access to these markets. 
The 11 export markets are Canada the Dominican Republic the European Union Japan and the United States. They are generally where the importing countries have country-specific tariff quotas for specified dairy products of New Zealand origin. This means that New Zealand has access to these markets for specific quantities of product at preferential tariff rates. In 2001 Fonterra was allocated exclusive access to these markets for fixed periods. But these exclusive allocations expire progressively from 2007 with the last expiring in 2010. This bill provides for access to each of these markets in different ways. The different approaches to be applied are necessary because of the different import arrangements applied by the Governments of the importing countries. In respect of the markets for butter in Canada and cheese in Japan the bill will remove all economic export restrictions that currently apply. This will allow any entity to export New Zealand - origin product into these markets and in this way allow a much wider group of New Zealand dairy processors and exporters to access the potential benefits from those export opportunities. Any relevant quality assurance and certificate of origin requirements imposed by the importing country will of course still apply and the New Zealand Food Safety Authority will continue to play a key role in that regard. 
For the remaining markets the bill provides a mechanism whereby export licences can be allocated among New Zealand dairy processors on the basis of objective criteria. Again a much wider group of New Zealand dairy processors and exporters will gain access to these markets and will have the opportunity to benefit from the increased exporting opportunities. The volume of product that a processor will be allocated in an export licence will depend primarily on the volume of milk solids that the processor collects directly from New Zealand dairy farmers. Export licences will be allocated initially for terms of 1 year at a time. For export licences that become available in 2011 and later years export licences will be allocated for terms of 3 quota years at a time to give longer certainty and continuity. The bill also provides for processors to trade export licences allowing licences to flow to those exporters who wish to take full advantage of the market opportunities. All registered dairy product exporters will be eligible to hold export licences. 
To facilitate the effective operation of the new allocation mechanism outlined in the bill additional enforcement provisions have been included regarding penalties for false declarations and various search and seizure provisions. It is important that the allocation mechanism is robust and that the information provided for the purposes of allocation has integrity and accuracy. Two of these markets will have additional rules to ensure that export licences allocated to New Zealand processors can be adequately enforced. For those two markets any entity will be able to export product outside of the quota—that is at the normal tariff rate—but only after the quota itself has been filled. These provisions relate to the market for dairy fat blends in Japan and the market for certain milk powders in the Dominican Republic. 
As a consequence of the new export licence regime set out in this bill the New Zealand Food Safety Authority will need to develop and implement new systems for export certification and reconciliation. This bill therefore provides for amendments to the Animal Products Act 1999 to allow these systems to be developed on a cost recovery basis. 
I believe that the amendments contained in this bill relating to dairy export markets will continue to maximise the economic benefits to New Zealand arising from our access to these markets while at the same time ensuring that we are meeting New Zealand’s international obligations. As well as introducing provisions relating to dairy export markets this bill amends existing regulation-making powers relating to the New Zealand Dairy Core Database—an important industry-good asset containing comprehensive information on dairy herds and their production performance. The current regulation-making powers in the Act apply only to the Livestock Improvement Corporation. The bill provides for regulations to be made that would apply to any other entity operating the database for industry-good purposes. This measure will ensure that the integrity of the database can be maintained into the future. 
The Government would like to see the Dairy Industry Restructuring Amendment Bill (No 2) enacted by 31 October 2007. This will enable the first round of export allocations to be done for some of these markets before Fonterra’s exclusive allocations to those markets expire at the end of this year. I commend this bill to the House.