Andrew Hardie, the Fonterra Shareholders Council representative for Hawke's Bay, said 76 per cent of dairy company suppliers are single-entity farmers owned by one ownership families.
And in terms of where dairy farmers see themselves, they are Fonterra's farming co-operative, not dairy giants, Mr Phillips said.
Concerned for the future of the dairy industry and our community, Mr Findlay, Mr Phillips and fellow Dannevirke dairy farmer Philip Hartridge attended a public meeting in Wellington called by the Ministry for Primary Industries (MPI) to discuss proposed changes to the dairy industry, which they said could affect Tararua and New Zealand.
MPI will hold another four or five meetings around the country.
"MPI had a very good team of policy gatherers there, and after the other meetings we're hoping Minister for Agriculture Nathan Guy will take on board our concerns," Mr Phillips told the Dannevirke News.
"The implication for dairy farming businesses if Fonterra has to accept back every dairy farmer who wants to return could have serious consequences.
"If, for any reason, Fonterra had to take back all suppliers returning from other companies, we estimate it could mean $1.35 billion of plant the company would have to build to cope with the extra peak milk supply.
"Even with our conservative estimates, the cost would be between $900 million and $1 billion.
"The reality of that happening means we'd have approximately spare [processing] capacity similar to the size of two Lichfield plants."
Fonterra's new milk powder drier at its Lichfield site in South Waikato is capable of processing up to 4.4 million litres a day.
The plant is similar in size to the world's largest drier at Darfield in the South Island, which produces up to 700 metric tonnes of whole milk powder a day.
Mr Phillips said the cost estimate scenario is based on 15 million litres of milk a day extra, which would be taken in at the peak of the season, requiring $90 a litre in capital cost spending to set up the new plant.
"That $1 billion is far better being invested into value-added product for the benefit of New Zealand Incorporated," he said.
"It's better to figure out some answers to the scenario now as we [Fonterra] need to plan our business so outside the peak period we can have a better cash flow."
Rangitikei National MP Ian McKelvie, chairman of the Government's primary sector committee, agreed there were "some challenges" around open entry.
"What you don't want is the whole lot [dairy farmers supplying other companies] coming back at once, and I accept the point you make," he said.
However, Wairarapa MP Alastair Scott said the open entry clause was about competition.
"Re-entry is necessary to encourage and promote competition," he said.
But Mr Findlay urged the MPs to be far more forceful.
"We need to rope in those bureaucrats," he said.
"Outside dairy companies have set up their businesses in the heart of the dairy industry, while Fonterra is forced to take all-comers."
But Mr McKelvie said all the Government was doing was implementing regulations put in place in 2001.
"[But] it was never intended to prop up foreign companies," he said.
Dairy Industry Restructuring Act, what it means:
Generally, Fonterra must accept supply from any new entrant who applies to become a shareholder, or any existing shareholder who applies to increase supply if those applications are made during the application period.
This includes a person who had stopped supply and wishes to restart supply.
When Fonterra was formed in 2001 it collected approximately 96 per cent of New Zealand's milk supply and the Government of the day established a competition policy based on farmer switching, known as the open entry and exit regime.
This means farmers can leave Fonterra (open exit), but can also return again should they wish (open entry).
