The government introduces a bill amending the DIRA
An Amendment Bill introduced in Parliament today will provide greater economic security for New Zealanders by supporting Fonterra’s move to a new capital structure that will reduce long-term risks to New Zealand’s dairy sector from $22.1 billion, said Agriculture Minister Damien O’Connor.
“The Dairy Industry Restructuring (Fonterra Capital Restructuring) (DIRA) Bill supports the transition of the Fonterra Cooperative to its new capital structure and lays the foundation for the continued future success of our export sector. higher value,” said Damien O’Connor. .
“New Zealand dairy farmers are world leaders and the Fonterra cooperative has been a central part of that.
“We believe this bill strikes the right balance between supporting Fonterra’s shareholder mandate and the opportunity to improve transparency in the industry.
“Long-term sustainability, fair prices in the domestic market and value creation in the New Zealand dairy industry are part of the balance we aim for. The past two decades have seen new entrants bring competitive innovations to the industry and we want that to continue.
“The continued success of our dairy industry is vital both to New Zealand’s ongoing economic recovery and to protecting New Zealanders from the sharp edges of a global economic downturn.”
The key risk mitigation measures in the bill were developed following consultation with industry and will:
- Improve the transparency and robustness of Fonterra’s commodity milk pricing arrangements by increasing the number of ministerial nominees to the Fonterra Milk Pricing Panel from one to two.
- Require that the chairman of Fonterra’s milk pricing panel be completely independent of Fonterra and appointed only with the approval of the Minister.
- Empower the Commerce Commission to issue binding directions to Fonterra on matters arising from its reviews of Fonterra’s milk pricing manual and calculation of the basic milk price.
- Support liquidity and transparency in the trading of Fonterra’s shares in its restricted farmers’ market, for example by requiring Fonterra to engage one or more designated market makers and make available to farmers and unitholders a independent financial market analysis of its performance.
- Support Fonterra’s ability to access internal capital to invest in innovation, requiring Fonterra to maintain and publish a dividend and retention policy.
“It is important that the Amendment Bill moves forward quickly to provide certainty for Fonterra, farmers and the wider dairy sector,” said Damien O’Connor.
“First reading of the bill will take place later this month, and I expect the select committee stages of the law amendment process to take place this year. This will provide an opportunity for the dairy sector and the public to provide further comments and suggestions.
“The benefits of a successful and efficient Fonterra flow through its nearly 10,000 farmer-shareholders in our rural communities.
“This bill will play an important role in the continued resilience and prosperity of rural New Zealand,” said Damien O’Connor.