By LIAM DANN and AGENCIES
Finance Minister Michael Cullen has thrown himself into a Chilean dairy debate, telling reporters in the South American nation that Fonterra will not use a proposed free-trade agreement to dominate local farmers.
In the Chilean capital, Santiago, this week for a meeting of Apec finance ministers, Cullen
told the Reuters news agency that New Zealand dairy companies would not use a free-trade pact to compete with the local milk producers.
New Zealand is negotiating a free-trade threesome with Chile and Singapore.
Dairy has been a sticking point with Chilean farmers nervous about Fonterra's dominant position globally and in the local market.
Fonterra controls Chile's largest dairy company, Soprole, holding a majority 55 per cent stake.
After a speech to the Santiago Chamber of Commerce on Wednesday, Cullen told Reuters that New Zealand dairy companies wanted to work with local farmers to help them develop products for other markets.
Trade talks were working towards an agreement that could give the Chilean industry confidence its survival would not be threatened.
"Our ambition is to expand consumption in third markets elsewhere. We're not seeing this as a means of coming here to grab the Chilean market from Chilean producers," Cullen said. "Our job is to try to expand traded products in third markets. Chilean producers, Argentine producers, Australian producers, we see allies in them."
Chile suspended negotiations with New Zealand last December after pressure from dairy farmers. But talks were revived after Chile's President, Ricardo Lagos, visited New Zealand in May. A third round of talks is scheduled to conclude in November.
Cullen predicted the final deal would be signed next year.
"The rest of the agriculture sector is not such a difficult issue, at least in a political sense. Dairy is the only area of the world's economy where we might be considered the 800-pound gorilla ... that can look a bit scary."
A Fonterra spokesperson said the company was comfortable with Cullen's comments.
Fonterra's relationship with the dairy industry in Chile is sensitive. Local farmers and some of Soprole's minority shareholders are concerned about Fonterra's long-term plans to fold Soprole into a joint venture operation it runs in other South American countries with Nestle.
A spokesperson for Cullen said the minister's comments should not be interpreted as having anything to do with Fonterra's specific business plans in Chile.
