McKelvie Ian: Dairy Industry Restructuring Amendment Bill (No 2) — First ReadingText is incorporated into the Bound VolumeMcKelvie Ian: Dairy Industry Restructuring Amendment Bill (No 2) — First Reading[Sitting date: 15 May 2013. Volume:690;Page:9997. Text is incorporated into the Bound Volume.]IAN McKELVIE (National—Rangitīkei): Firstly I must congratulate my colleague from the Primary Production Committee and fellow rural New Zealander Damien O’Connor on having this Dairy Industry Restructuring Amendment Bill (No 2) drawn from the ballot. Drawn from the ballot may be a little rich because we heard tonight from Denise Roche that it is in fact a raffle. I thought that was pretty rich coming from the party that does not really like gambling very much. I commiserate with Damien O’Connor however on the fact that I will not be able to support this bill. Contrary to what the previous speaker Sue Moroney said we are not not supporting this bill because we believe in free markets and things like that. We are in fact not supporting this bill because we trust the 10500 dairy farming families of Fonterra to get it right and to do the right thing by their company.The bill originated out of concern that Fonterra may be sold down the road by the Trading Among Farmers policy which was introduced after much consideration in order to enable Fonterra to achieve a stronger capital base. Capital of course is vital to the primary production sector. It is vital elsewhere in our economy. This fact has never been more apparent than it is in the discussions taking place in the meat industry which Mr Ardern inadvertently referred to some time ago. Certainly capital is a very important factor for our agricultural industry in New Zealand. Hence the Trading Among Farmers initiative was brought to fruition as a result of the Dairy Industry Restructuring Act an Act that had a complete and constructive select committee process at the time of its introduction. There was criticism of Trading Among Farmers but you get criticism of anything in a democracy. It was well supported in the end and I think has been well proven.As the member for West Coast - Tasman stated he was uneasy about the cap that Fonterra itself has since imposed on the fund and introduced this member’s bill to place a cap at 20 percent of that fund. My recollection was that he introduced the member’s bill prior to Fonterra setting in its constitution its own cap of 25 percent of that fund. The result of this fund being established has seen spectacular growth in the value of these tradable units from a list value of $5.50 to I think trading today at $7.97 or something like that.Interestingly enough the sale of farmers units predicted by many at the time of the launch or float has not occurred and in fact has considerably strengthened the balance sheet of our dairy farmers in New Zealand. Fonterra of course attracts about 80 percent of the milk in New Zealand and contrary to Mr O’Connor’s assertion that the price of $7 or $8 as it currently stands will put off people entering the industry I think the fact that the Fonterra shareholders have retained their shares despite the very attractive price really means that their capital base is built to a strong enough extent that they will continue to join and support their industry as it moves on. Interestingly today we have also seen the next round in the life of Synlait as it announces its intention to list on the New Zealand Exchange. Synlait is one of a number of players in the next tier of the dairy industry in New Zealand and of course is based in Canterbury.All in all the dairy sector in good heart has built a new level of resilience and confidence as a result of Trading Among Farmers and is playing a greater role in our export receipts than ever before and in fact in New Zealand’s future. There were a number of other assertions made during the last couple of speeches and I think they can demonstrably be proved to be untrue. I think that as the Fonterra company attracts thelevel of milk it does at about 80 percent of the New Zealand production production is rising at a greater rate than in fact can be swallowed up by the new companies coming into New Zealand. Fonterra is having to build a significant amount of new infrastructure itself to keep this going and so I think we are seeing the dairy industry in extremely good heart at the moment. I think that Trading Among Farmers has played a very good role in strengthening the capital base of Fonterra. I also think that the price that the Trading Among Farmers shares has got to is probably well backed by the assets of Fonterra and can be demonstrably proved to be a useful acquisition for the dairy industry. Thank you.