Flavell Te Ururoa: Dairy Industry Restructuring (New Sunset Provisions) Amendment Bill — First Reading 
Flavell Te Ururoa: Dairy Industry Restructuring (New Sunset Provisions) Amendment Bill — First Reading 
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TE URUROA FLAVELL (Maori Party—Waiariki) 
: 
 Tena koe Mr Deputy Speaker. Kia ora tatou e te Whare. I say from the outset that the Maori Party will be supporting the first reading of the Dairy Industry Restructuring (New Sunset Provisions) Amendment Bill. We do so as we usually do: in order for the debate to be taken outside to the community to allow the nation to have a say about the legislation. Clearly from the view of the Greens through to that of the major bigger parties there is a difference in opinion so we will be supporting the notion of allowing the bill to have some air across the country. 
If I can cut to the chase this bill is designed with the intent of increasing the operating efficiency of the dairy markets in New Zealand by regulating the activities of Fonterra. Its purpose is to ensure that New Zealand markets for dairy goods and services are contestable. Just to put some history to the debate I am not too sure about all of the detail but as far as I can understand it when the Dairy Industry Restructuring Act 2001 came into being it allowed the merger of New Zealand’s two largest dairy cooperatives and the New Zealand Dairy Board to form one single cooperative company—namely Fonterra. At its establishment Fonterra collected approximately 96 percent of New Zealand’s milk production. Given this dominant market position the Government decided to regulate the behaviour of Fonterra in relation to its suppliers and potential competitors to ensure the efficient operation of dairy markets in Aotearoa New Zealand; hence there is the notion of a contestable market. Even if there is only one seller in this case Fonterra the seller may be forced to act as though there were many more sellers. 
What does this bill mean for tangata whenua? I want to state the case just for the record that this nation recognises the enormous contribution that Maori dairy farmers make to our community and our export markets farming as I understand it an effective area of around 720000 hectares. Worth an estimated $7.5 billion Maori are the largest natural grouping of pastoral farmers in New Zealand. Given the collective nature of our landholdings and the number of shareholders they support there is also a strong case for saying they are the most sustainable farmers in New Zealand. 
Maori dairy farmers own an estimated 10 million shares in Fonterra with some of the major players in the sector being large incorporations like the 2006 dairy competition winner Parininihi ki Waitotara Incorporation which has an estimated $50 million of farming interests in Taranaki. Another big player is Wairarapa Moana Inc. which owns two dairy units milking a combined total of about 7200 cows and producing 2.3 million kilograms of milk solids annually. The group also claims assets of around $150 million. The Maori proportion of shares in Fonterra I am led to believe is around 8.3 percent. 
Given this background how will this bill enable Fonterra to be a successful and innovative dairy company and still remain a low-cost commodity producer? How does regulation enable Fonterra to weather any volatility in the market without necessarily sacrificing milk payouts at the expense of farmers? We know that the Fonterra payout is increasingly a barometer for our domestic economic conditions since dairy farmers’ incomes and investment plans are closely tied to international dairy product price movements. It is of fundamental importance to Maori and indeed to the nation that this bill provides certainty in the market although also keeping a strong relationship between New Zealand dairy markets and the Government’s policy direction. 
The key way that this is to be achieved is that the bill sets out the market share thresholds that if met would bring about the expiry of Subpart 5 of Part 2 of the current Dairy Industry Restructuring Act 2001. Subpart 5 provides for effective regulation and transparency of Fonterra’s activities within the dairy industry. Subpart 5 also deals with the expiry of these regulations on a certain condition when the dairy market share threshold is met. Currently if independent processors collect 12.5 percent or more of milk solids within a season the market share threshold is met. Let us remember that Fonterra collected approximately 96 percent of New Zealand’s milk production so there has never been much room for independent operators outside it. The new legislation provides for a more detailed approach in determining when the threshold is actually met and increases that threshold to 20 percent. However the new legislation is very specific in defining the process of determining the threshold and it effectively empowers the Minister of Agriculture to forcibly enact the expiry of this subpart in the event that the threshold is met. 
From our reading of the bill the apparent increase in the power of Government intervention would worry us. In essence this bill affects approximately 1700 dairy industry workers farm owners farmers and farmhands who are Maori. We will be very interested in their views obviously and we would like to hear from them and from the Federation of Maori Authorities. We know that the Federation of Maori Authorities’ dairy cluster has long battled for better Maori representation in relation to Fonterra but has been told that sector representation at a board level cannot happen. We will be interested to hear just how involved the federation has been in the negotiations around changing the threshold. 
As the proud member for Waiariki I will be looking out in particular for the advice of those involved in the Maori-owned Miraka Ltd which I know wants to build a milk processing plant at Mokai about 30 kilometres north-west of Taupo. 
Louise Upston 
: It’s looking great. 
TE URUROA FLAVELL 
: It is looking great. The Miraka partners Wairarapa Moana Inc. and Tuaropaki Ltd have been doing some great work in that particular area. Already dairy farmers in the region are running about 10000 cows between them. The proposed plant is located in the catchment around the Taupo area and it could also take Maori-supplied milk from further north around Rotorua and from other Tuwharetoa-owned land in the region. I suggest that this bill will be very high on Miraka’s agenda in terms of its initiative in establishing an independent plant for the processing and marketing of milk. I want to share with the House the comments of PGG Wrightson’s Maori agribusiness manager Clinton Hemana about the excitement associated with Miraka Ltd. He said: “Maori have been seen as a sleeping giant for some time and this is them coming to life it is the next step forward to pursuing their own path.” 
We welcome all of these views and as I said we will support this bill in its first reading to make sure that we can capture the views across the nation. Kia ora tatou.