Terms for major review of $18b dairy industry to be revealed tomorrow

The much-anticipated terms for a major dairy industry review are about to be released.

New Zealand's $18 billion dairy industry will tomorrow learn what parts of it are to come under Government scrutiny when the terms of reference for a major industry review are published.

The terms for the review are much anticipated with New Zealand's milk volume growth generally agreed to have flattened, meaning competition for a smaller milk pool is likely to heat up, and Fonterra's performance as a so-called "national champion" lately in the spotlight

Agriculture Minister Damien O'Connor told about 300 dairy farmers at a DairyNZ Farmers Forum at Mystery Creek, Hamilton that the parameters of the review had been approved by cabinet and would be made public tomorrow.

The new Government has brought forward the review from its legislatively scheduled time of 2020/21 and O'Connor has signalled it would be a more wide-ranging probe than simply examining the status of industry competition, which is governed by the Dairy Industry Restructuring Act 2001 (DIRA).

Earlier this year, O'Connor told the Herald the review would look at pasture versus intensive farming, corporate versus family farming and environmental matters as well as competition and capacity.

An amendment to DIRA was passed into law earlier this year to clear the way for the earlier review and to ensure the market muscle of Fonterra would continue to be managed.

Before the amendment, the efficiency and contestability provisions of DIRA were due to expire in the South Island later this month, because its milk market there was now deemed competitive.

But the Commerce Commission in 2016 concluded competition was not sufficient to remove the DIRA provisions.

O'Connor also advised that the review, which was to take 12 months, was not a rehearsal for the scheduled 2020/21 review, as many in the industry thought.

"By rolling over the Act and committing ourselves to a wide-ranging review we are taking a considered and strategic approach to the changing needs of the dairy industry," he said at the time.