No new fruit fly detection
The Ministry of Primary Industries says there have been no new detections to date of the fruit fly in Auckland and no adverse reaction from trading partners.
The ministry wants to regulate milk price governance, with Commerce Commission monitoring and mandatory disclosure of pricing information.
Meanwhile, to ensure freedom of supplier entry and exit from the co-op, the ministry's preference is legislation to "underpin and strengthen" Fonterra's TAF (trading among farmers) proposal.
Earlier in the 20-page document MAF notes TAF would, through the interests of external investors in Fonterra, provide some counterbalance to the interests of Fonterra's farmer-shareholders, whose interest is primarily to maximise the milk price Fonterra pays them.
So the ministry is echoing what those raising concerns about TAF have been saying all along: outside investors, even if only buying units giving them dividend rights, will seek to minimise the milk price and maximise the dividend. MAF also notes investors holding fund securities may be consulted on nominations for Fonterra's independent board seats.
If TAF doesn't go ahead, the ministry recommends legislating share pricing.
What's prompted MAF's suite of regulatory recommendations? It's worth noting the Ministry of Foreign Affairs and Trade, among others, was consulted and agreed on the RIS content. There's little doubt many of our trading partners would love to see Fonterra hobbled.
There's also the political background: a Prime Minister who has publically acknowledged he'd like to see Fonterra listed and a governing party that was in opposition when Fonterra was formed. Meanwhile some of those who were MPs at that time now have interests in Fonterra competitors. And Fonterra's rivals are using furiously lobbying in Wellington to clip Fonterra's wings.
MAF clearly doesn't trust Fonterra not to abuse its dominant position. Competitive contract pricing when New Zealand Dairies and Open Country opened new plants in the South Island can't have helped. But has it occurred to MAF that Fonterra may be able to pay more to its suppliers simply because it is more efficient, and has economies of scale? After all, that's why Fonterra was formed.
