King Colin: Dairy Industry Restructuring Amendment Bill — In Committee 
Text is incorporated into the Bound Volume 
King Colin: Dairy Industry Restructuring Amendment Bill — In Committee 
[Sitting date: 17 July 2012. Volume:681;Page:3552. Text is incorporated into the Bound Volume.] 
COLIN KING (National—Kaikoura) 
: 
 This is the Committee of the whole House on the Dairy Industry Restructuring Amendment Bill. The bill is making good progress. It is what the majority of the milk suppliers of Fonterra wish for and it needs to be stated quite clearly. It is a very interesting situation that the Opposition finds itself in especially when you listen to— 
The CHAIRPERSON (H V Ross Robertson) 
: Order! 
COLIN KING 
: —sorry Mr Chairperson—the two debates. One is from the Greens and the other one is from Labour. It must terrify the primary industry when it thinks of that combination and the terrible damage that that would do to the very basis of the New Zealand economy. When we look at Supplementary Order Paper 85 in the cold light of the facts that present themselves we do see that it clearly is the Labour Party trying to dig itself out of a position that it placed itself in. Setting the limit for the cap as was spoken of by the previous speaker the Hon Maryan Street at 23 percent just goes to show how ineffective it would be in the sense that the intention under the constitutional vote at the next annual general meeting is to actually limit it to well and truly under that. So it is more of a platitude to try to get back into the situation and be able to see the positives that this particular bill presents. 
It is very interesting to also consider that in setting up Trading Among Farmers and there has been a lot of talk about setting it up there is no guarantee that it is actually going to meet the expectations and aspirations. As any good Government would do there is also a very appropriate means by way of taking action that will ensure that the value that Fonterra represents to the New Zealand economy and to the farms that are involved in the industry is retained. 
 When we go to the Dairy Industry Restructuring Amendment Bill we see that proposed new sections 109A to 109L in clause 8 set out a very prescribed process that requires communication from Fonterra to clearly identify and provide the evidence that would be necessary to tell the Minister for Primary Industries that in actual fact an alternative programme needs to be put in place. That would be a programme whereby a fair value share would be established. Although everybody is going on about Trading Among Farmers there is in this bill a framework whereby if in fact it does not address the redemption risk to which Fonterra is exposed it provides a mechanism to establish the fair value of a share. That is something that needs to be really looked at and concentrated on because although the organisation of Fonterra is trying to maximise returns back to farmers there is no silver bullet for a lot of these things. The Government has tested the thinking of Fonterra and it needs to have that rescue net beneath it in the event of Trading Among Farmers not actually attracting the interest of outside purchasers of the economic value of those shares. 
This is a very good bill. It does worry me when we hear talk of caps because a 23 percent cap sounds all very nice and wonderful but what I have heard from the other side of the Chamber is that it wants to cap the number of dairy farmers in this country. That has been a public comment that has come out and it just sort of starts to paint the Opposition members in their true light as dislikers and haters of the primary sector. When they look at any opportunity they will do their utmost to actually rip revenues out of the primary sector for other use. They do not think about looking for efficiencies or providing opportunity for economic growth; they look at ways to gain money out of the primary industry to squander on other reckless ideas. 
It was an absolute pleasure to work along with the Primary Production Committee on this particular bill. I would have to say that a lot of concentration was put on just how we would arrive at the dairy milk price because the bill itself opened us up to a whole lot of dialogue that raised questions about contestability. That draws my attention to the amendment in the name of Te Ururoa Flavell. We are quite confident that in the select committee we have set the scene at a very high but contestable level. We recognise that there will be major interest within the dairy sector of new entrants and thus doing we as a committee were very conscious not to buy into some of the information used as a base study for setting the farm-gate price. When you looked at Deloitte’s research into that it was quite aged and it had some inconsistencies around the product values put into the farm-gate milk price. I am very very conscious that there will be significant Maori interest in the dairy industry. Maori today represent 10 percent of the primary industry. On that basis we considered it quite fully and we took very good advice. However we appreciate the thought of the member in putting that amendment forward. 
I am very pleased to see that Part 1 of this bill addresses the fundamental framework of Trading Among Farmers should it fly and I wish Fonterra all the very very best. If it does not actually work out and cover off the redemption risk as it is hoping then I am confident that what is considered in proposed new section 109 and right through that section will address the fair value share price. Thank you very much.