Norman Russel William: Dairy Industry Restructuring (Raw Milk Pricing Methods) Bill — Second Reading In Committee Third Reading 
Norman Russel William: Dairy Industry Restructuring (Raw Milk Pricing Methods) Bill — Second Reading In Committee Third Reading 
[Volume:661;Page:10124] 
Dr RUSSEL NORMAN (Co-Leader—Green) 
: 
 I stand to take a brief call on the Dairy Industry Restructuring (Raw Milk Pricing Methods) Bill on behalf of the Greens. I should also start by making a declaration of interest. I am not a shareholder of Fonterra but I am a fan of Fonterra even though at times I have been quite critical of some of Fonterra’s water issues. Fonterra is one of our most important companies—in fact it is by far our most important company. Fonterra is a producers’ cooperative. I think that a lot of New Zealand industry could learn from the cooperation that dairy farmers have shown and the effectiveness of the producers’ cooperative when competing in the global market. However Shane Ardern’s point is right: the proportion of milk exports that Fonterra controls is now down to 84 percent and that reflects the changing nature of the dairy industry in New Zealand. 
Two different groups in the industry take advantage of the regulations within this bill. One group which the Greens are very fondly disposed towards are the small New Zealand producers that further process raw milk and add value to it whether for the domestic market or the international market. Those smaller New Zealand producers make a very positive contribution towards the New Zealand economy and we are very supportive of regulations that ensure they get raw milk at a competitive price. 
However another group of much larger producers which is increasingly foreign-owned is taking advantage of the raw milk regulations in order to access cheap milk. They have to be subsidised by Fonterra shareholders and for that reason we certainly support the changes in this legislation that give Fonterra and its shareholders a much fairer price for their milk than under the current arrangements. The current arrangement means that the foreign-owned processors are basically getting a subsidy from New Zealand dairy farmers and the Green Party thinks that is totally unacceptable. The reason this is particularly pertinent at the moment is of course the large foreign interest in buying up the New Zealand dairy sector. That is happening both at the processing level and increasingly as we have seen in the most recent applications in terms of dairy land. It is quite critical that as these large foreign firms look at buying up the New Zealand dairy sector we provide some protections to Fonterra so it does not find itself having to provide subsidised milk to Chinese Government - backed processing firms so that those companies can export that product back to China. 
It is important to note as foreign intervention goes into the New Zealand dairy sector that it is not just any old competition. We should not treat it as just another capitalist company coming into New Zealand. In fact these companies are often backed by the Chinese Government which has made it very clear that it expects Chinese companies to buy up agricultural land overseas and has given directions for Chinese companies to do that. When Fonterra finds itself competing with these companies and having to provide them with milk at a regulated price these are not just regular everyday any old companies that are trying to make a profit around the world. These are companies that often have the backing of the Chinese Government which is of course a totalitarian State. The Chinese Government recently locked up some people from Rio Tinto because the attempt by Chinalco the big Chinese miner and processor to buy Rio Tinto was turned down. 
It is very important to realise that we are dealing with some very aggressive competitors that are trying to take over the New Zealand dairy sector and take advantage of whatever regulations we have in place. It is quite important that we change the regulatory structure using this bill so that a fair price is paid to Fonterra shareholders. I think that we probably need to look a little bit further. In my view it is only fair that we should discriminate between smaller scale New Zealand processors and large-scale foreign processors. I stand to be corrected but my understanding is that within this bill as it currently stands we do not discriminate between providing milk at a regulated price to small-scale New Zealand producers and large foreign-owned producers. 
It seems to me that it is not in New Zealand’s interests to force dairy farmers to provide raw milk at a regulated price to our foreign competitors—often backed by the Chinese Government and others—that are coming into New Zealand in an attempt to undercut the New Zealand dairy sector. Given the dominance of Fonterra within the market I certainly support providing milk at a regulated price to smaller scale New Zealand producers but I am not at all supportive of the situation where the dairy farmers of New Zealand should be made to subsidise and support the large foreign multinationals backed by the Chinese Government in their attempts to undermine the New Zealand dairy sector. 
Fonterra is a fantastically successful example of cooperation. It is a fantastically successful New Zealand cooperative and company and it has played an enormously important role in the New Zealand economy. These regulations will continue to help Fonterra to do that job but I think we need to future-proof these regulations and to look at how we will deal with the continued attack and intervention by large foreign multinationals that are trying to undermine our cooperative.