By Philippa Stevenson
agricultural editor
A bill that would strip the Dairy Board of its monopoly powers takes dairy industry reform a step forward but allows for a leap backward in corporate structure, says the Business Roundtable.
In a submission to the special select committee considering the Dairy Industry Restructuring Bill, the group
said removal of the board's statutory export monopoly was long overdue.
"But the beneficial impact of this step on the economy is likely to be negated, possibly for more than a decade, if the proposed establishment of a giant cooperative comes to fruition under conditions which would prevent farmers from exiting with the full value of their shares."
The requirement in the bill that makes the removal of the single-seller legislation conditional on the merger of dairy cooperatives was not necessary, the Roundtable said.
The Government should not be determining or sanctioning dairy industry structure, and there were strong grounds to argue that the mega-cooperative would be detrimental to New Zealand interests.
"The risk for New Zealand in linking the vast bulk of its dairy industry to a single firm is that, for a variety of reasons including severe capital constraints, it is possible that this firm may not be particularly successful in the international marketplace."
The Dairy Board should be converted into a company, with shares initially allocated to dairy cooperatives in proportion to their share of total milksolids supplied to the board. The act should specify that shares in the new marketing company be fully tradeable without any restriction on ownership, the Roundtable said.
The submission, in part based on successive reports commissioned since 1992 by the organisation to argue for producer board reform, will not find favour with dairy farmers.
The Roundtable has to be acknowledged for in the past accurately highlighting the industry's failings and providing remedies that have since been reluctantly swallowed.
However, farmers on the whole suspect its aim is to strip them of industry control.
They called passionately for retention of the single-seller legislation for at least five years, and clearly signalled that many of them felt overwhelmed by the scope and speed of proposed change.
