Hop Industry Restructuring Bill

I move, That the Hop Industry Restructuring Bill be now read a third time. This bill was introduced into the House on 19 March 2002. It had its first reading on 1 October 2002 and was referred to the Primary Production Committee on that day. The select committee amended the restructuring day as requested by the New Zealand Hop Marketing Board and reported the bill back to the House on 4 December 2002. The bill restructures the New Zealand Hop Marketing Board into a cooperative company—New Zealand Hop Marketers Ltd—and removes the regulatory controls on the domestic marketing and export of hops.

Hops are grown for the flavouring of beer—for those who do not know. New Zealand production is concentrated in the Nelson-Motueka district, and I am proud to say that about 90 percent of that is in the Tasman district in my electorate. Exports of around $8 million of hops and hop products go from New Zealand each year. The New Zealand Hop Marketing Board was established under the Hop Marketing Regulations in 1939 to coordinate the marketing of hops to breweries both in New Zealand and overseas. The regulations provide that the board is the sole agent of growers in the sale and export of New Zealand grown hops. Today the Hop Marketing Board is the only statutory single desk to retain domestic marketing powers, as pointed out by Mr Smith.

When the board was established the industry was predominantly domestically focused. Today over 80 percent of the annual production of New Zealand hops is exported. The current regulated structure of the New Zealand hop industry is outdated and out of step with the international trading environment for hops and hop products. The board sought the bill on behalf of hop growers to enable the hop industry to respond positively to the challenges of the international market. New Zealand accounts for just 0.6 percent of world production. The price of hops in New Zealand generally reflects the world price, and the worldwide demand for hops is dependent, of course, on beer consumption.

The bill means that the industry can be more flexible in responding to changes in consumer tastes, for example towards speciality beers. The removal of the single desk will improve market signals to growers, we trust.

Hops are unusual in that they are particularly sensitive to the latitude and climate in which they grow. Due to this latitudinal sensitivity, hops are grown in relatively few countries throughout the world, the majority of which are in the northern hemisphere. This enables New Zealand to provide out-of-season hops to the northern hemisphere. New Zealand has unique cultivars bred at the Riwaka research station that demand a premium in some markets. The bill enables growers to retain joint ownership with the Crown of these unique varieties, by transferring the board’s ownership rights in the cultivars to the grower-owned cooperative company.

There is a strong tradition and culture of cooperation and coordination within the New Zealand hop industry. The bill gives effect to the industry’s request for defining its ownership rights in the board, releases the board from the regulatory constraints imposed by the regulations and the two old Acts, and deregulates the sale and export of hops.

The difference in this Government’s approach to producer board deregulation is that we have responded to requests from the industry, not threatened the industry with deregulation, as did the last Government. We have delivered to the hop growers a cooperative structure, not forced on them a corporate structure, as the previous National Government did to ENZA. That is one of the key differences, and that is the reason I support this bill through the House. I wish the industry well in the restructuring of the board, and I am sure that it will do its best into the future. I commend this bill to the House.

The National Party, of course, supports the third reading of the Hop Industry Restructuring Bill and, in fact, will facilitate the Government’s progress today and make sure we complete the third reading as quickly as possible and save the particular member leading the debate any further embarrassment. The position the poor member finds himself in, whereby he has changed his point of view completely, has been outlined well in the House in the last half hour or so. But I want to take the opportunity of congratulating the member. He clearly acknowledges now that the damage that he threatened would occur to other industries that were deregulated has not occurred, and he is prepared to be mature enough to acknowledge that, and therefore see the benefit of now moving to also help the hop producers in New Zealand achieve greater wealth for themselves, and therefore for the country.

I guess in supporting the bill I just want to pick up on the latter comment of Damien O’Connor, and certainly the comments of Doug Woolerton in his second reading contribution. Doug Woolerton said that what we are doing here, in effect, is all but creating a producer board under another name.

R Doug Woolerton: I didn’t say that.

That is exactly what Doug Woolerton said, because I wrote his words down, word for word: it is all but creating a producer board under another name. He went on to say that that is not what National proposed. I say to the member that what we have here is exactly what National proposed. As Damien O’Connor has said, what we have here is the ability of the 26 hop growers to belong to a company that happens to be a cooperative company. This legislation does not force any of those hop growers to be part of that company—it is up to their free will, which is as it should be. If they decide they want to be part of that company, they have the ability to set the rules under which that company will operate. Again, I tell Mr Woolerton that that is how it should be. In other words, there is a huge amount of choice and flexibility available to the people who are involved in the industry.

It is nothing like what we have had in the past. I tell Mr Woolerton that it is certainly not a producer board in disguise. Mark my words: as this industry settles down and further develops, those producers will have the ability to remain in the company if it continues to produce results for them as individuals. If the company fails to do that, then I do not see any move by the producers that would cause them to be restrained by the cooperative company—the company will not be able to do that. I have little doubt that in an industry as small as this, which clearly is run in a cooperative way, with issues being debated amongst the 26 members—who, incidentally, are all confined to a very small region of New Zealand, which is the electorate of my colleague the Hon Nick Smith—the growers will arrive at the ability to make decisions and company rules that advance their particular case.

Finally, I question again Damien O’Connor’s earlier contribution. He said he would give the House the benefit of an explanation as to why this remarkable renaissance has occurred, and, if I understood his explanation, it is because the hop industry has matured and developed since 1999, and now exports about 80 percent of its product overseas. The reason Mr Damien O’Connor is now comfortable supporting the deregulation of the hop industry is that it has grown to a stage where it exports 80 percent of its produce overseas.

💬 Hon Damien O'Connor: They have asked for it.

I accept that they have asked for it, but that is the explanation Mr Damien O’Connor gave. I remind the member that when he was so opposed to deregulation, calling members on this side of the House “traitors” for advancing the cause, we were dealing with the dairy industry, which, at that stage, exported in excess of 90 percent of its produce overseas. I leave it to the next speaker from the Labour Party to have a brief discussion with Damien O’Connor, to see whether that obvious inconsistency can be clarified for him.

Debate interrupted.