Dairy Industry Restructuring Amendment Bill (No 3)

Madam Deputy Speaker, I would just like to, firstly, acknowledge your tenure in this House and your contribution to Parliament. I apologise; I wasn’t able to be here for your valedictory, but I acknowledge that and say I don’t have any food in my mouth this time.

I move, That the Dairy Industry Restructuring Amendment Bill (No 3) be now read a third time.

The bill represents a balanced approach to addressing changing circumstances in a dynamic industry and a changing global context. The bill was introduced in 2019 and considered by the Primary Production Committee, which reported back in March 2020. It was read a second time in July this year. I’d like to acknowledge the very good work and the cooperation of the Primary Production Committee.

As I noted in the second reading debate, the bill has undergone some substantial changes since its introduction. This is in part a response to a changing context. Since the bill was introduced, the world has undergone a major shock as a result of the COVID19 pandemic. That event highlighted the importance of New Zealand primary industries in supporting New Zealanders by providing food and new sources of employment and also in supporting our economic wellbeing. New Zealand’s food exports kept up the flow of export earnings, and the primary industries are now taking their rightful place in our economic recovery. It is therefore essential that the dairy industry has the right regulatory settings to support it.

We want to see a strong and efficient dairy sector that meets the needs of farmers, consumers, and the economy as a whole. That’s why the bill has evolved since its introduction. The Dairy Industry Restructuring Act (DIRA) regulates Fonterra. Fonterra is a key player in domestic and global dairy markets. We want to see a strong and efficient Fonterra with a strong and efficient dairy industry. We also want to ensure that farmers have pathways for their milk to reach domestic and global markets through an efficient dairy processing sector, and that they can make good choices about the use of their land, for the benefit of their farm business and the economy as a whole.

When the dira was passed, it included obligations on Fonterra that were intended to promote its efficient performance and to support new processors into entering the market. The open entry provisions in the DIRA required Fonterra to accept anyone who wanted to be a shareholder and to accept all shareholders’ milk. Over time, these requirements have created some inefficiencies. Fonterra has faced uncertainty over milk supply volumes, and, as a result, has had to invest in extra capacity to manage that uncertainty. We now have a number of other large-scale processors in the market and we cannot afford to impose continuing costs of this kind on Fonterra. That is why the bill, as it faces its third reading, has been amended to repeal the open entry requirements.

Fonterra will be free to decide, like other processors, whether or not it wants to take on new suppliers, with some conditions. At the same time, the bill balances this discretion with some of the expectations on Fonterra, as I’ve said. The bill requires that when Fonterra decides whether or not to accept an application, it must take a couple of important factors into account. The company must consider, firstly, the effect of its decision on the ongoing viability of the farm where a Fonterra farm has changed hands, and, secondly, land-use opportunities available to the applicant. The bill, therefore, balances the interests of both Fonterra and of farmers. It gives Fonterra the ability to better manage its milk supply and investment in processing capacity. It provides a pathway to a supply contract for new farmers entering the dairy sector while enabling farmers to make choices about land use.

The bill also recognises that the dairy sector has changed over time, and that regulation that made sense in 2001 is no longer required. We have removed the entitlement of large-scale processors, who are generally focused on export, to buy raw milk from Fonterra at regulated prices. This measure was implemented in 2001 to support the development of competition at a time when Fonterra controlled 96 percent of the market for farmers’ milk. We now have, as I’ve said, a number of large-scale processors around the country with their own raw milk supplies. They have demonstrated that it’s not necessary to provide large processors with regulated access to milk from Fonterra. So we have removed a requirement that is no longer needed. We have, however, ensured that processors who really need access to regulated milk can still get it. These processors are little companies that supply New Zealand domestic consumers, for the most part. They make a wide range of cheese, yoghurts, ice creams, and other speciality dairy products that provide choice and variety for New Zealanders. We want to ensure that they can keep doing that, because often the innovation comes from these small and dynamic companies.

We’ve also retained but updated provisions for Goodman Fielder to buy regulated raw milk from Fonterra if it needs to. I stress the words “if it needs to.” Since 2001, Goodman Fielder has been buying raw milk from Fonterra, but it has not been relying on the DIRA to do so. It has bought its milk under a commercially negotiated contract. So the provisions in the DIRA are there as a backstop if, in the future, Goodman Fielder cannot negotiate further contracts for raw milk or source its supplies.

I know that this has been somewhat of a controversial matter. There was a lot of discussion at the select committee questioning why we need to have some big regulatory protection for a large foreign-owned processor, and the answer is that we have to be pragmatic and to make a trade-off. We want New Zealand consumers to have reliable access to the basic dairy products—fresh milk, cheese, etc., at fair prices. So we need at least one large competitor to Fonterra. That competitor is Goodman Fielder at the moment, and the provisions in the DIRA are not there for the benefit of Goodman Fielder per se; they are there as an insurance policy for New Zealand consumers, and we will be keeping these provisions under review.

As for the remaining issues in the bill, I think that they have been well covered in the second reading, and we’ve had good discussion during the committee stage of the bill to clarify some of the points. We have tidied up some aspects of the base milk price to clarify its purpose and to make it clear that it’s a benchmark, not a regulated price that Fonterra must pay. We’ve also provided for one member, as was discussed, of Fonterra’s milk price panel to be appointed by Fonterra’s board on the nomination of the Minister of Agriculture.

The base milk price provisions in the DIRA are all about transparency. That’s why the process has to be robust and credible. The change in membership aims to strengthen that transparency, and the new member, as I say, will be nominated by the Minister, not appointed by the Minister. He or she is not the Minister’s representative but, indeed, someone who can be trusted to have a fair oversight and check on the process.

I consider that the bill provides a re-entry regime that meets the current needs and supports the role of the dairy sector in meeting the challenges that we all now face as a country. As I said at the outset, the industry and the context in which it operates is dynamic and subject to constant change, both domestically and globally. The dairy industry faces the challenge of changing consumer demands, competing alternative proteins, climate change, environmental limits, and new technology and practice. The regulatory regime will need to flex and adapt it to remain fit for purpose. For that reason, the bill reinstates provisions for a regular review that were removed in 2016, and this review is necessary as we move forward into the future.

Can I just acknowledge the good work of the Primary Production Committee in overseeing this. Can I acknowledge the cooperation of all parties in the House to get the final wording right, Finally, can I say that while Fonterra is our national champion and we are very proud of it, we need to ensure that it’s not a bully in the market place; that it does leave the door open for innovative evolution of our dairy sector; and that it does allow individual farmers or individual companies that want to, to go out and seek new markets, and that it works with them and doesn’t try to compete against them. So I commend this bill to the House.

Thank you, Madam Speaker. I would like to, in speaking to this bill, reiterate what the Minister of Agriculture has just said, in that it is good to be standing here with cross-party agreement on where we’re heading with this piece of legislation.

I’d also like to just note to farmers out there, who are probably busy calving their cows at the moment rather than listening to us in Parliament this morning—and I hope it’s going really, really, well out there—that the main part of this bill is, in my mind, about repealing the open entry for farmers. That, in my mind, has been a really important thing for a very long time, because, you know, there has been this aggravation with farmers that people can leave the cooperative, which is fair—people should be able to leave the cooperative any time they wish—but that they were able to come back in but leave the other shareholders holding the baby while they left and actually come back and decide to return on the same terms. So this actually gives Fonterra a level of ability to stop people taking advantage of the good nature of the cooperative by actually choosing when to leave, but using it as a safety net to come back in. So I’m a great advocate that this has been a really good move.

We’ve talked a bit this morning in the committee stage, and we also talked about it in the Primary Production Committee, about retaining that open entry for new farmers, and while we did struggle to get absolutely the right wording around that—and it made it a bit of a difficult process—I’m really heartened with where we’ve got to in terms of the Minister stating a clear intent by this House of Parliament that that is the expectation that we all have on Fonterra, which is that new entrants will be treated fairly. At the end of the day, if we don’t have new entrants and don’t have sharemilkers and people like that being able to buy into our industry, we’re going to end up with a huge problem: we actually will end up without an industry, so it’s really critical that Fonterra goes down this path.

What I will say about this bill—there’s still a lot of good faith in this bill, and I think that’s why it’s so important that today in this House we do state some things and some expectations of Fonterra. We talked this morning about cooperation with other companies. If it got to the stage where a company had to spill milk or throw out milk and Fonterra refused to take that milk in the interests of the reputation of the industry, which should always come first, then I would be really, really disappointed. You know, there’s a level of trust going on here. We’re saying to Fonterra, “We trust you. But you have to prove that that trust is worthy.” So I wouldn’t like to see any milk spilt with games being played.

I’m concerned—well, I had a concern around the appointment to the milk price panel. I’m still a little bit concerned, and I’m heartened that the Minister talks about this person overseeing the process rather than being so fixated on the end price. I still do have a concern that there is a little bit of openness around this still, and I wouldn’t like to see the day where a Minister might nominate somebody and then Fonterra, for whatever reason, you know, plays games around—perhaps, turning that person down, unless they had some absolutely valid reasons, which they would probably put to the Minister beforehand, before the nomination was made.

I still do have some concerns in the space of Fonterra being able to stop supply of people around issues of environment and animal welfare, and it’s not that I don’t think that that’s the right thing to do—I absolutely think that if people aren’t living up to the standards, then Fonterra should have every right to do that—but currently they do have the right to do that in their terms and conditions of supply, and I have seen times when Fonterra had the ability to do that and didn’t actually operate their terms and conditions of supply.

So, you know, there’s a lot of trust in this about Fonterra getting the process right. Of course we would expect them to do the right thing, but we would also expect them to get the process right. I have some valid concerns when Fonterra goes through that process that, actually, on a lot of farms we don’t have one entity, so we have owner-operators on some farms, and on other farms we have farm owners who employ sharemilkers. Fonterra has to be very, very careful to get their processes right when they’re looking at issues of environment and animal welfare, to make sure that they have the right process and they’re actually targeting the right person when they start to make those decisions, because they can get it very, very wrong, and have done.

So with this piece of legislation, we’re giving Fonterra a bit more openness, and we expect them to be open and transparent. I think there’s not a high level, I will say, of trust in some parts around Fonterra. There are some really good people who work in our factories, who process our milk, who are our tanker drivers, but what I will say is that, you know, sometimes, I guess—I’ve been in the head office of Fonterra in Auckland, and walking in there as a shareholder, which I am—it sort of feels sometimes a bit disconnected from the farmers. So I think the onus is on Fonterra here to actually build that structure and actually build that level of trust back up, which sometimes has been a bit lacking.

So recently, Fonterra made an announcement that the chair’s successor going forward will be Peter McBride. He’s got a strong reputation in the horticulture industry, and I think this new level of trust that we’re putting in Fonterra, and this new level of good faith, we would expect to be, I guess, rewarded with an openness and transparency, building the strong reputation of Fonterra because it’s still 80 percent of our industry, and I hope it stays 80 percent of the industry. I have been concerned about dairy industry restructuring Acts in the past letting foreigners come in—we have no problem on this side of the House with foreign ownership, but I do have a problem when they have been able to come in and set up under rules that disadvantage Fonterra’s commercial operations.

So there’s some right moves going on here, but I do really, really want Fonterra to stay 80 percent of the industry, and I believe that is in the trust of their reputation—the way they treat these shareholders, the way they treat the general public, and the way they move forward. And that is more about our global reputation, so we can talk about these things, but it is our actions that speak louder than words.

The Minister spoke in his speech about the Goodman Fielder provision. Look, I worry less about the local market. We need Fonterra to be strong in the global market. Over the last few months, we’ve heard a lot about farming being the backbone of the economy. Look, it’s an essential part; it always has been, it always will be—we’re food producers in this country. It has really been disheartening over the last two or three years to find that farmers have actually felt like they’ve been targeted in so many ways over so many things. And then when COVID hits, all of a sudden farmers are the people who are going to save the economy.

So what I would ask every member of this House, in the cooperative spirit that we’re currently in over this dairy industry restructuring bill, is that as we go forward—and we’re all going to be out of this House in a couple of weeks and we’re all going to be having very big discussions with each other about how we think New Zealand is going to move forward as we go into an election process—I don’t want to see farmers be the targets in this election campaign like they were in the last campaign. So let’s move forward in the spirit and the intent of what we’re doing in this bill this morning: work cooperatively as a Parliament. I love now being the chair of the Primary Production Committee. We work well together, and let’s just work on behalf of farmers for ever in this country because they are the backbone. Thank you.

First of all, I want to acknowledge the Hon Damien O’Connor. When we first came in, I think this was one of the first pieces of legislation that we had to address pretty swiftly because there were regulations that were about to expire, and this had been a piece of legislation that had been kicked around by the Opposition. It had some very challenging political components to it. I was reading some comments earlier this morning by some dairy farmers who, basically, said that for about eight years the previous Government sat on their hands and didn’t get to a resolution on where this bill should land.

So when the Hon Damien O’Connor came in, by dint of necessity he had to introduce some very quick pieces of legislation just to fix a gap and now has undertaken a very comprehensive review of the Dairy Industry Restructuring Act that has required him to make some very politically challenging decisions. To that end, I want to acknowledge my colleagues from across the aisle and from our coalition parties, who have worked diligently to be rather constructive. But I don’t want to take away from the fact that it actually took real leadership, because somebody had to make the tough calls, and he’s done that, and he’s done that across a whole range of areas.

I wasn’t going to turn there but I will because my colleague from across the aisle just mentioned a range of issues that impacted rural communities and farmers. I think that the line in her speech was, you know, “I don’t want to see farmers be the target of political campaigning”. Well, on this side of the House, I couldn’t agree more. So I would ask that in the nature of how we have worked constructively on this piece of legislation, which was an absolute requirement for dairy farmers—I ask that all sides of this House take out that fire that somehow it’s our side of the House that is out there to destroy the livelihood of our primary producers, because it’s absolutely incorrect.

Whether that be on labour issues—we’re working very constructively with industry. Just this week, I’ve sat down with Federated Farmers, DairyNZ, the Meat Industry Association—I mean, that’s just in my little small component, let alone what the Minister has been doing day in, day out, working with leadership from across the primary sector, but not just the leaders and the sector leaders. I know, because I see it all over the work that he’s doing, he’s out there, out on the backblocks, in farms, up in the highlands, doing what he can to ensure that our food producers—and particularly those of our food producers who have undertaken exceptional practices—are really highlighted and promoted on this side of the House. So I must dispute that.

Whether it was in the emissions trading scheme, whether it was in fresh water, let’s be very frank: there have been substantive and monumental wins for our food producers under this Government. But most specifically, apart from everything, that side of the House left our rural infrastructure behind. But anyway, I didn’t mean to go into this debate to be political.

We have worked very constructively together, so to that end I want to acknowledge the submitters that came before us, whether they were from some of the newer milk-producing companies or from those more established sharemilkers, farmers, and so on. There was a real recognition across the sector that there needed to be a raft of changes.

As the Minister just said prior, when Fonterra was last reviewed, it held about 96 percent of the sharemarket. That has been reduced to about 80 percent now. That was about where the Commerce Commission recommended that at that point, things like those open entry provisions could be reviewed, and that is what has occurred under this piece of legislation.

I don’t want to take too much of the House’s time, but I do really want to acknowledge the officials that worked with us and worked very hard. I think I heard in some of the earlier comments in the committee of the whole House around—we really, as a whole committee, wanted to ensure that new entrants to the dairy milking sector could be ensured an open entrance. Getting the legislative framework together was very challenging, so I want to acknowledge the extremely diligent work of our officials, and again, just the cooperative nature of those that sat on that committee, so Barbara Kuriger, Amy Adams, Nathan Guy, Andrew Falloon, and Hamish Walker from that side, and David Bennett—and I think we’ve got McKelvie now—and from our side, Rino Tirikatene, Kieran McAnulty, and Mark Patterson. We’ve been the tight four. We’ve had too much change, but—we’ve seen a little bit over that side; hopefully, it’s nothing in the water. But here we all are.

Just finally, I just want to say that it has not just been over the course of the lockdown. Our food producers, they do what they’ve always done. They work hard and they get the job done, and that’s what we saw. I know that our Minister here worked hard to make sure that the requirements and the regulatory environment over lockdown was there, that the mechanics were there so that they could just do what they needed to do, but let’s be clear: it wasn’t just an overnight revelation that we had that, oh, all of a sudden, our primary production sector is key. We’ve always been champions for our primary producers. Fonterra, in fact, is a creation of this Government, as is Zespri, as are many other very key components to our primary producers.

So, look, without further ado, may I thank again the nature of the collaboration. I hope we see that continue to endure over the election campaign, because I would hate to see that our primary producers are seen as the football that everybody continues to kick around. So without further ado, I commend this bill to the House.

Madam Speaker, I just want to take a very brief call in the Dairy Industry Restructuring Amendment Bill (No 3). I want to acknowledge the committee stages we’ve just been through, and the contribution from Minister Damien O’Connor. I thought the questions were good, but I equally thought his answers were constructive, concise, and certainly allayed some of the fears I had with some of the legislation, and I just want to acknowledge that as well.

Can I also acknowledge his third reading speech, where it was pleasing for him, as a Labour Minister of Agriculture, to acknowledge the importance of the primary sector to New Zealand. His speech certainly did that—in fact, he gave a far better speech today than he did for the Crown Pastoral Land Reform Bill that was before the House last night. But it is important that this Parliament recognises the importance of the primary sector to New Zealand. Despite the contributions we’ve just had from Kiri Allan, I think—sadly—the primary sector became a kicking ball in the last election. And I think there was an attempt by some political parties in this House to help increase a divide between urban New Zealand and rural New Zealand. Of course, now we’ve had—

💬 Greg O’Connor: And one of them’s standing right there now.

Well, if the Minister is suggesting I’m standing and created a divide between rural—or the Minister, that was the interjection from Greg O’Connor, who suggested I created a divide between urban and rural New Zealand, that is absolutely incorrect. I came in here with a passion for New Zealand agriculture. And I want to say to that member, Greg O’Connor, that whilst we have the challenge in the economy around COVID, it is challenging this economy, and the thing that has become the foundation for New Zealand’s economy is agriculture. It always has been and it will be.

💬 Greg O’Connor: Well, don’t weaponise it.

And for that member to suggest that I’m threatening that stability is absolutely wrong. I remember well the campaign last year with the now Government, the Labour Party, trying to create an issue—particularly around swimmable waters, for example. It wasn’t the National Party that did this. This National Party has always recognised the importance of agriculture to New Zealand.

💬 Greg O’Connor: Weaponised the divide.

💬 DEPUTY SPEAKER: That’s the fourth time. It doesn’t make it any better. Don’t bother repeating it.

I had the privilege, as a former Minister of Agriculture and as a former Speaker, to travel overseas on numerous occasions. During my time meeting politicians all around the world, there was one word that nearly every overseas politician recognised, and it was the word “Fonterra”. You could be giving a speech which was clearly being interpreted in other languages to people, and you could sense that when the word “Fonterra” was mentioned in any language it was recognised as an international brand, and a New Zealand brand. I say that because this House needs to continue to recognise the importance of the primary sector in New Zealand’s economy, particularly in light of COVID; it then needs to recognise that, within the primary sector, the giant of the New Zealand primary sector is indeed the dairy industry. And within the dairy industry, the giant company is Fonterra, and the performance of Fonterra affects the standard of living of every New Zealander.

So, as this 52nd Parliament concludes and we embark on an election campaign, I say to the House—although I won’t be actively campaigning for re-election—I certainly hope we don’t see a repeat of the election campaign of 2017 when some political parties quite deliberately went out of this House to create that urban-rural divide. I think most New Zealanders, particularly in light of the effect of COVID-19 on, for example, our international tourism industry, now finally appreciate that the industry that will bring this country back out of trouble is the primary sector. And of that, the dairy industry is the giant, and within that giant dairy industry, Fonterra is one that all New Zealanders should be proud of.

Thank you, Madam Deputy Speaker. I too would like to take this opportunity to thank you very much for your service to the nation and to put on the record my admiration for the way in which you’ve always conducted yourself and the portfolios that you’ve had responsibility for, and, in particular, the work that you’ve done in the space that I am quite passionate about, and that’s caregivers and fostering children. So thank you—thank you very much, Madam Deputy Speaker.

It’s quite an interesting moment for me to stand and to make a small contribution on this Dairy Industry Restructuring Amendment Bill (No 3), and I say so because, right now, firstly, New Zealand First has been an absolute winner in having Mark Patterson join our ranks not just as an MP but as our rural spokesperson on all matters rural and farming. I just want to acknowledge Mark for the way in which he’s steered New Zealand First’s interests through the passage of this legislation—and not just New Zealand First’s interests, those of our party, but those of the farming community, in general. Mark is a true champion for the rural sector, rural communities, and we in New Zealand First are that much stronger for having him on board.

For my part, the dairy industry isn’t actually that new to me. As a foster child who was taken in by Gordon and Sylvia Thorburn in Pahīatua, I came to know about dairy farming then because Gordon was the company secretary of the amalgamated dairy company of Pahīatua. He built that company up. In the time that I was at school and living with that family for five years, I watched him—I just thought he was crazy. He got up at, like, 4.30, 5 o’clock in the morning, he worked at home, he did his chores and things that had to be done, he was gone, and he was in the office in Pahīatua at 6 in the morning. My foster mum, Sylvia Thorburn, worked as his personal assistant. She sort of split her time: time at home, looking after us kids and doing things, and then time in the office with Dad. In his time there, Gordon amalgamated every dairy company from what became South Wairarapa all the way through the Wairarapa up into the north, up to Woodville, and then he continued on. He created, for his directors and for his shareholders, the Tui Dairy Company.

Tui went on, and I recall coming here to Parliament, and one of the phone calls that I got from my foster father at the time that I was sworn in as an MP, made junior Government whip, was serving alongside of the Hon David Carter in those days. He made a phone call, firstly, to tell me he was very proud that I had made it into Parliament, but, secondly, to give me some advice. He talked a little about Jim Bolger at that time, because Jim had been, in his time, a Minister for, I think, labour relations, and Gordon had had a lot to do with Jim Bolger back then, had done trade missions for him. He said to me, “One thing you should always avoid, Ron, is creating monopolies. Don’t ever allow a monopoly to be created.”

Well, of course, we had the legislation to put through in that time, which saw the merging of Kiwi Cooperative Dairies and New Zealand Dairy Group (NZDG). In around that time also, I had been appointed by the Māori Land Court to be a director on the Pouakani 2 Trust, which had large shareholdings with NZDG. Henry van der Heyden was the chair at the time, and I got to learn and see firsthand how the dairy industry was now operating quite differently from when I was at school and seeing it through the actions of my foster father. This monopoly thing played on my mind quite a bit, and we went ahead with the legislation that allowed Kiwi and NZDG to merge. It was controversial, Minister Carter knows, in some sectors, but we went through with that.

One of the things that gave me comfort was the open entry provision clauses and the clauses in there that actually prevented Fonterra acting like what Gordon Thorburn didn’t want to see. That allowed other milk processors to be established; it was guaranteed that they could have supply of milk so that they could. The funny thing was, fast forwarding a few years, I ended up as the deputy chairman of the Wairarapa Moana Incorporation (WMI), taking advantage of that very clause when we set up Miraka. We could not have set up Miraka without the guaranteed supply of milk from Fonterra. We had brought in a whole bunch of shareholders—Māori; we had a Vietnamese shareholder, 20 percent shareholding—and we knew we could get up and running, but the issue was around absolute assurance that we could get the milk that we needed. This legislation, as it was, guaranteed that.

We had seen some companies, like Tātua, a superb company, led in those days, I think, by John Luxton—I’m not sure if he was the chairman, but he was definitely the director of Tātua at that time. They found a niche in the market that Fonterra was not interested in, and they became very successful. In fact, we watched them and thought, “Crikey, the shareholders of Tātua are getting far better pay-outs than Fonterra.”, and it’s because they found a better way of operating. They weren’t just focused on the bulk supply of cheese, the bulk supply of milk powder; they went in for niche products. We had watched Westland, and we made our decision at WMI to go ahead and have a crack at building our milk. Well, time’s moved on; Miraka is successful.

Time has moved on and the need for the open entry provision is now passed. We do take on board the comments of the Hon Damien O’Connor, and other speakers on the National Party side, that there’s a high level of trust now being put in Fonterra. It does now behove them to demonstrate that they are an honourable and ethical corporate entity and that they will behave appropriately—Parliament is entrusting them.

I think what is great is that having had those warning signals put into the Hansard for the future, should there ever be a question, because we all know that things move and change, we’ll all be gone from this House—well, not all of us; some of these young ones will still be here—

💬 Hon Member: You and I won’t be.

We’ll be gone. Some of us will be gone and we’ll be watching on telly. I have no doubt that 10 years from now, with different people leading Fonterra, there could well be a shift in culture and a shift in attitude. The words that have been expressed here today by both the Opposition and by the Government members are a clear warning and an indicator to Fonterra: please honour Parliament’s intent. You’ve been entrusted; please do not repeat the behaviours that some of us have seen in the past.

Cooperative models are wonderful. You look at kiwifruit and you look at the dairy industry, and I go right back to the days of the amalgamated dairy company and Tui Dairy Company—they’re wonderful and they’re wonderfully successful. But they can fall apart. I look at the wool sector and I worry as to how that’s going to be put back on its feet again. But Parliament’s trusting you, Fonterra; Parliament is now leaving it in your hands.

I want to also endorse the words of, particularly, the National Party spokespeople who said, “Let this point now be the point from which we parliamentarians back off and start treating the rural sector with respect.” People are saying that the rural sector are the backbone of our economy; they have always been the backbone of the New Zealand economy, and they are the ones who will carry us through the COVID recovery period and bring us out the other end to a higher level of prosperity. Respect them.

Thank you, Madam Speaker. I acknowledge the previous speaker, Ron Mark, and agree wholeheartedly with his sentiments. In fact, I have a view that many in New Zealand only love the agricultural sector when they need them, and now they need them more than ever. I know there’s recognition across the House today, but let’s hope it’s more—and I know, certainly from the member that just took his seat, it’s certainly heartfelt. I hope the other speakers actually reflect on what’s being said here. Don’t just talk about it, live it, because this is the sector, the whole agricultural sector, that does pay our bills, does allow us to have the standard of living that we all enjoy in New Zealand, and, indeed, gives us a higher place amongst other countries in the world because of the respect that our agricultural sector—or the high regard it’s held in around the world.

However, this dairy restructuring bill, this is an important bill, and I want to focus particularly on the terms of supply and particularly the price differential provision that’s been put in in this bill. I think my colleague Barbara Kuriger pointed out, quite rightly, that Fonterra’s always had the ability to differentiate in their terms of supply for poor environmental practices. This was a stick approach, and it was a very big stick and a stick that Fonterra were reluctant to use, for many reasons. However, I hope this provision is used with the intent that it was put in there so that Fonterra can use this as a carrot approach: to reward good behaviour rather than to punish poor behaviour. I think, certainly from experience in other sectors, we can see that, actually, people do react to that very positively. If we could see dairy farmers and suppliers being rewarded for good behaviour, you can bet everybody’s going to be jumping on that very quickly.

We have to remember, as I said in the second reading on this bill, that, in fact, we’re not judged by our best; we’re judged by our worst, and the worst suppliers are the ones that make the headlines, and quite rightly so. That has been at the expense of the vast majority of dairy farmers that do a fantastic job environmentally, have invested millions of dollars improving their environmental practices, water quality, all those things that we all aspire to. But there are outliers, and the best way to deal with that is to reward the good ones. The other ones will follow along. They won’t like to see their neighbour getting a little bit more for their milksolids than them, and they will follow along accordingly. So I applaud that provision in the bill, and with that, I commend this bill to the House.

Thank you, Madam Speaker, it’s a pleasure to rise to take a short call on this bill. It essentially seeks to modernise, and make more efficient and effective, an older bill on the dairy industry and Fonterra’s ability to regulate and function. As the Green Party, we were pleased with this bill, and we were pleased, in particular, with the changes that came after the Primary Production Committee’s hearing of submissions. The Government has taken extensive consultation on this bill with the dairy industry, with Māori stakeholders, with experts, and with other affected communities.

We are pleased to say, as a party that does stand for environmental issues, that this bill indicates a willingness to take that industry along with us as we come into modernising our economy and our industries to be more sustainable and to make transformative changes, hopefully, as we go forward—as we need us all to do in our fight against climate change. So it is good to see that our law is modernising and that regulation is coming along with our biggest industry at this point, and our biggest stakeholder in that industry, Fonterra. So with the changes made, and with the intention of this bill being put in place today, we do support this bill.

Thank you, Madam Speaker. Look, it’s a pleasure to rise here in the final reading of the Dairy Industry Restructuring Amendment Bill (No 3). Now, the key aspect that I really want to touch on is the open entry provisions. That has, for a number of years, been an area of concern, and it’s great to see that we’ve got to a position now where I think we’ve got a more workable solution for the rural sector. Representing Waikato, the largest dairying region in the country, I’ve certainly had plenty of views shared around where we need to get to with this legislation, why it’s needed to change over time, and had a number of frustrations expressed around the inability to progress that change, to get that difference in place, I suppose, of where people want to get to.

So the key aspect with that had been around the ability for people to come in and out of the co-op, significantly adjusting milk volumes as a result of that; effectively, derisking their business decision to look at supplying an alternative to Fonterra because they knew there was always the option to come straight back again if that new supply agreement didn’t work out for them. So this takes that away, gives Fonterra the ability to have a lot more say in who actually supplies milk to their co-op, which then enables them to align those decisions with what their direction might be taking, particularly in relation to environmental policies; for example, some of the remoteness of pick-ups depending on the location of the properties. So some of those aspects are important changes that have been allowed here.

But it has not taken out open exit, the other half of that consideration—open entry and open exit. So open exit continues to remain in place, which is appropriate given the scale of Fonterra, still being 80-odd percent of the milk supply. It is important to enable those suppliers to have the flexibility to exit and look at other options if they wish, and that’s as it should be. But now, of course, they have to consider that they may not be able to come back if that doesn’t work out. So it requires a bit more due diligence, a little bit extra risk on those suppliers as they look to shift out of that.

Now, one concern I have within that, though—and I raised this during the committee stage—was around the potential impact it may have on new suppliers, as in first-time suppliers, young farmers getting into farm ownership, if they are unable to supply Fonterra. That would, in my view, be disappointing in most instances—not every instance, of course—and there’s some exceptions to where and why that may be the case. But broadly, if a farm has previously been a dairy farm, then it would be my expectation that a young farmer buying their first farm should be able to have some confidence that they can supply to Fonterra, but certainly to supply in general. And as I mentioned, the risk with the rule that’s being proposed is that often young farmers or first-farm purchasers, they’re not buying the most pristine farm. It’s often in those second- or third-tier locations. So there are some elements of that that may cause Fonterra to consider whether supply is appropriate in relation to the distance, to pick up maybe some of their environmental focus around contoured properties, soil types—all those aspects that come into play as well. So that would be concerning if young farmers are unable to get in.

So I just really want to place on record here that the expectation from this House—whilst it has been difficult to clearly draft the requirements or a definition of what may be a young farmer and how that might fit in, it’s important to note that our intent is that Fonterra acts in good faith to work with new suppliers, first-time suppliers, or young farmers, first-farm owners, whatever classification you wish to give them, to support them as best as possible to come in and supply milk to the co-op.

So that’s really the two aspects that I wanted to touch on. It’s good to see this progress being made now. And I would like to thank all members on the select committee, particularly our side: Barbara Kuriger, who’s the chair now; David Bennett, who was the chair prior to that of the Primary Production Committee, who have done some great work in shepherding this through. We look forward to seeing it implemented and giving Fonterra a little bit more control over their business. Thank you.

Bill read a third time.