McKelvie Ian: Dairy Industry Restructuring Amendment Bill — First Reading 
Text is incorporated into the Bound Volume 
McKelvie Ian: Dairy Industry Restructuring Amendment Bill — First Reading 
[Sitting date: 03 April 2012. Volume:679;Page:1581. Text is incorporated into the Bound Volume.] 
IAN McKELVIE (National—Rangitikei) 
: 
 As a sheep farmer it gives me a bit of pleasure I guess to speak to something that concerns what I term the other half of the industry. As a sheep farmer I also know the danger of a fragmented industry and I do not think for a minute that this Government will be endeavouring to fragment the dairy industry. At this point having said I am a sheep farmer I must declare an interest in this Dairy Industry Restructuring Amendment Bill however as I do have an interest in Fonterra through family interests. None the less I need to refute now a couple of the extraordinary things I have heard in the last quarter of an hour.  
I did not hear the last speaker refer once to the bill. I do not know what fresh water has to do with this bill—frankly I think nothing. I think however if you look at the strength of Fonterra and if you look at the strength of the dairy industry the best chance we have of resolving some of the issues that the Green Party has talked about is to ensure that Fonterra remains strong because it will be able to put money into research and development which will certainly overcome a lot of the issues that the Green Party is obsessed with talking about. I also want to refute a claim that the previous Labour speaker made about the 4-month time frame and the reason for this bill being pushed through the select committee process faster. It certainly has nothing to do with precluding opportunities to speak or to hear about the matters concerned in this bill. It is simply a matter of letting the industry get on with its business in the new financial year. If this bill does not get through Parliament in time it will inhibit the industry’s ability to develop and grow.  
The great progress and changes since Fonterra’s inception have brought about the need for change in the Dairy Industry Restructuring Act. I do not think there is any doubt that the significant growth in this industry in that time also means we need to change this Act and make progress for the future. We are talking about amending an Act that has been in place for nearly 10 years and we must remember also in the process of amending this Act that farmers asked for this Act in the first place. They asked this Parliament to assist them in forming Fonterra. As a result of that it is necessary for this Parliament to continue to regulate Fonterra in one form or another. We do not have any choice in my view. We have a responsibility to the New Zealand community to continue to reform and act on this dairy industry Act and consequently the amendment to it the Dairy Industry Restructuring Amendment Bill.  
The dairy industry is challenged by being by far the biggest industry in New Zealand. It is by far the biggest contributor to this country’s well-being and I think inevitably in New Zealand we tend to look at big and successful organisations just like we look at big and successful sportspeople and knock them off their perches from time to time. I think that is a tragedy for Fonterra and for the dairy industry in New Zealand. I think we need to give Fonterra all the assistance we can to ensure that it is able to compete in New Zealand to compete internationally and to look after—as the member for Taranaki - King Country talked about—the large number of shareholders that Fonterra has. As I said a minute ago Fonterra has a great ability because of the strength and the unity of the company to reinvest a large amount of its surpluses in research and development an absolutely critical area for New Zealand agriculture—not only for the dairy industry but for New Zealand agriculture. To encourage the strength of Fonterra in that respect is equally important.  
I think to talk of the risk to Fonterra from outside investment is also flawed and I think we need to remember as the member for the Greens who spoke earlier talked about that from time to time even New Zealand family farms need a place to park some assets for a while as they get through very difficult times and the best solution for this—in the dairy industry particularly—is to be able to park your shares. If you can park your shares it avoids your need to draw down larger debts from banking organisations and the like. 
Hon Damien O’Connor 
: Rubbish! You never buy them back. 
IAN McKELVIE 
: Absolutely they have to buy them back and that is the opportunity that they have got. 
Hon Damien O’Connor 
: You won’t be able to afford to buy them back. You know that too. 
IAN McKELVIE 
: That is not correct. The member for West Coast - Tasman is getting a little bit confused. Clearly any business goes through times of difficulty and I think this is an ideal way of assisting the development of this industry and the development of those farmers by allowing them to park shares in what will be known as the shareholding company. I think it is very good process for the industry to go through.  
Not only that but we must also remember that Fonterra needs an enormous amount of capital to survive and to continue to operate. However strong we think the shareholders and the company are inevitably as we have seen in the last 3 or 4 years companies come under stress and shareholders come under stress and they need to find cash somewhere else. If we do not form and put in place a very strong policy and process for Trading Among Farmers as it is known and as clause 8 of the bill puts in place then I think we will also leave Fonterra at some risk. I think again the scaremongering from particularly New Zealand First and the Greens about the support for this part of the bill is nonsense. There is absolutely no doubt that the majority of Fonterra’s shareholders did and still do support this part of the bill.  
They support it with some nervousness and if the member—I think she comes from Auckland—does not believe me she can come with me to Taumarunui or to Feilding stop and get some petrol and she will be bailed up by a dairy farmer on every corner in my electorate as I am sure she would be in many of our other electorates. She will very quickly learn that they do on the whole support this like the previous speaker for National. They are a little nervous about some aspects of it and that is why I welcome the opportunity to take this bill and look at it through the select committee process—[ 
Interruption 
]; there is a parrot over there—which I am sure will resolve a lot of the fear and the issues that some of our dairy farmers have about it.  
The next issue I want to get on to very briefly is clause 13 relating to the base milk price and the way this is set. I think you will be able to realise that the relationship between the base milk price and the value of the shares is absolutely critical to the future of this industry so it is most important that this is regulated. It is regulated now to some extent. It is most important that this is regulated because it enables us to see a transparent milk price - setting process and at the same time it takes the value of the share and places it to one side in that process. It is most important that this is transparent as well as we go through this process.  
As I said I look forward to this bill going to the Primary Production Committee. I look forward to the submissions. As I said I am stopped in streets all around my electorate to talk about it so I am sure that will ensure that what comes through in the form of submissions is very strong. We must ensure the bill eventually appears in Parliament in a form that satisfies the needs of our dairy farmers the industry and the country. We owe a responsibility to our No. 1 industry and we must continue to foster it. I have no problems supporting this bill going to the next stage and I look forward to the debate in the select committee as well.