New Zealand First proposes expanded access to Fonterra milk
New Zealand First leader Winston Peters announced the proposal, called “Use It or Lose It”, as part of the party’s position on domestic value-added dairy manufacturing. The plan would alter the Dairy Industry Restructuring Act 2001, known as DIRA, which currently limits regulated access for independent processors to 50m litres per season.
Under the proposal, eligible companies would receive the full allocation of up to 500m litres annually during their first six years of operation. The volume would then be reduced over four further seasons, to 80%, 60%, 40% and 20%, before the entitlement ended. The proposed maximum is ten times the existing statutory limit, and access could last for as long as ten years.
Applicants would have to build physical processing facilities in New Zealand. They would also be required to develop brands and market New Zealand dairy products overseas. The policy is aimed at companies investing in large-scale processing rather than only establishing smaller independent operations.
The milk would not be supplied with a state subsidy. Processors using the regulated allocation would pay the standard farmgate milk price, as well as efficient transport and collection costs. The arrangement is intended to provide payment to Fonterra and its farmer shareholders for the raw milk solids supplied under the scheme.
Peters linked the proposal to Fonterra’s agreement to sell its global consumer-brands business to France’s Lactalis for $4.2bn. He said the legislation that created Fonterra had envisaged a nationally significant export business, and argued that the cooperative’s withdrawal from consumer-facing finished products warranted a policy response. He also said the existing 50m-litre limit was designed to help startup processors but restricted investment in advanced manufacturing on an industrial scale.
New Zealand First plans to pursue the proposal through the current statutory review of DIRA. Formal recommendations from that review are scheduled to be presented to Parliament in 2027. The policy has entered a wider debate over Fonterra’s statutory obligations, including concerns among dairy cooperatives about compulsory diversion of supply and disputes over which milk pools should be available to processors.
