Review of the Dairy Industry Restructuring (Raw Milk) Regulations: Clarifying industry concerns and the Regulations’ intent
Introduction
The need for a review
On 10 August 2007, the Minister of Agriculture announced that government officials, led by MAF, would review the Raw Milk Regulations.
This review was prompted by the awareness that the Raw Milk Regulations are under severe pressure: in the 2007/08 season, demand for milk under the Regulations is predicted to exceed 400 million litres for the first time. But the industry also has long-standing concerns about the Regulations. These concerns range from access and certainty of access to regulated milk, to various aspects of the pricing methodology.
On 22 August 2007, the Regulations Review Select Committee presented the findings of its investigation into the Raw Milk Regulations, and recommended that the pricing formula in the Regulations be amended in a particular way. This Review will consider the Committee’s concerns along with concerns raised by industry.
About the review and this discussion document
The Raw Milk Regulations are important in promoting a vibrant and innovative dairy industry. They form part of a suite of regulatory measures in the Dairy Industry Restructuring Act 2001 (DIRA), including requirements for “open entry and exit” of suppliers to and from Fonterra Cooperative Group.
While the review primarily encompasses the Raw Milk Regulations, its scope includes the legislative powers under which the Regulations are made. The potential for legislative amendment to these powers will be considered “in scope” for the review.
Review principles
The following principles will apply to the review:
• The “open entry and exit” regime in the DIRA is the primary means for promoting a competitive market for raw milk. The Raw Milk Regulations need to be considered in that context.
• Milk that is required to be made available under the Raw Milk Regulations should be made available at a fair and efficient price.
• The Regulations should promote competition at the farm gate for raw milk by not discouraging independent processors from sourcing milk on standard commercial terms directly from farmers.
Stage one
The review will be in two stages. The objectives of the first stage are:
• to clarify the intent of the Raw Milk Regulations, based on the purposes and intentions set out in the Dairy Industry Restructuring Act 2001; and
• to canvass the full range of industry concerns about the current operation of the Regulations, so that these can be assessed against the Regulations’ intent.
To achieve these objectives, MAF has prepared this discussion document, which outlines the original intentions of the Raw Milk Regulations and officials’ understanding of concerns about the Regulations. The discussion document seeks your comments on and concerns about the Regulations.
Information about making a submission is in the section Making a submission. Submissions close on 14 December 2007.
Officials will analyse the submissions and assess industry concerns against the intent of the regulatory framework. These results will be fed directly into the next stage of the review.
Stage two
In the second stage of the review, officials will develop options for addressing the concerns identified in the first stage. MAF will publish a second discussion document, outlining options and seeking industry feedback. This is scheduled to occur in March 2008.
The review will report to the Minister of Agriculture by July 2008.
Contact for Enquiries
Policy Analyst
MAF Policy
Sector Performance Policy
Ph: 04 894 0580
Fax: 04 894 0745
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