Dairy Industry Restructuring (Export Licences Allocation) Amendment Bill

I present a legislative statement on the Dairy Industry Restructuring (Export Licences Allocation) Amendment Bill.

💬 DEPUTY SPEAKER: That legislative statement is published under the authority of the House and can be found on the Parliament website.

I move, That the Dairy Industry Restructuring (Export Licences Allocation) Amendment Bill be now read a second time.

I am pleased to bring this bill back to the House today. As we indicated, as I said in the first reading, the dairy industry is the cornerstone of New Zealand’s economy, and I want to thank all of our farmers for their hard work. It’s expected to generate over $25 billion worth of export revenue this year alone, up 10 percent on last year, through the hard work and dedication of our dairy farmers. The changes being progressed in this bill will support the Government’s goal of doubling the value of exports within 10 years and delivering economic growth for all of New Zealand to benefit every New Zealander.

I want to briefly touch on some of the key features in the bill that we spoke about during first reading speeches. I’ll then touch on two minor changes recommended by the Primary Production Committee, which we will be accepting and moving through this process.

The bill as introduced is intended to improve the current dairy export quota allocation system. The bill makes three significant changes to the Dairy Industry Restructuring Act 2001 (DIRA). Firstly, it changes the bases of quota allocation from bovine milk solids collected to export history. Secondly, it creates a regulation-making power to enable 10 percent of one or more quotas to be reserved for otherwise ineligible exporters and exporters eligible for lower volume allocation.

And, finally, the bill provides quota access to non-bovine animal dairy exporters on the same basis as bovine dairy exports—for example, for sheep milk or deer milk or goat milk. These changes will remove barriers to trade and support the Government’s ambitious trade agenda. They’ll help stimulate innovation and encourage value-add to New Zealand dairy products. Importantly, the changes will help maximise quota utilisation and the benefits of export quota for dairy industry and help drive better outcomes for New Zealand.

I want to thank the chair of the Primary Production Committee, Mark Cameron, and all committee members for their work in scrutinising this bill, and I recognise that the report was adopted by the committee unanimously, and I thank them for that.

I also note that the select committee received two written submissions, one from Fonterra and one from Open Country Dairy. The select committee also heard from Fonterra, who spoke to their submission. I want to acknowledge Fonterra and Open Country Dairy for taking the time to express their views on this bill to the committee and, therefore, to Parliament.

In response to the Primary Production Committee’s advice, I’ve made two minor changes to the bill to ensure fairness, transparency, and certainty in dairy quota allocation. In respect of new transitional measures for the quota compliance programme (QCP) requirement, I have created a transitional measure for that quota compliance programme requirement. The QCP requirement provides that if a participant has not obtained a QCP for any of the three years prior to the year in which they were allocated quota, they will be declined quota allocation unless their reasons are of a reasonable satisfaction to the Minister. The transitional measure will mean that the QCP requirement does not apply to any of the 2023, 2024, or 2025 quota years. This change ensures that the current participants are not unfairly disadvantaged by choices they made under the current legislation before these changes have entered into force.

Around specific tariff headings for designated markets to be notified in the Gazette, I’ve amended the bill to require the tariff headings for each quota market administrated under the DIRA be included in the Gazette notice advising that quota applications are open. This change will make it easier for exporters to know what information they need to provide when applying for a quota.

I again express my appreciation to the committee for their recommended improvement, to the submitters for their valued feedback, and to officials for their hard work in bringing this bill through the process. The bill is now a robust piece of legislation that replaces what had become an outdated system for dairy quota allocation. This will support the success of our dairy sector and, ultimately, New Zealand’s economic growth and prosperity.

I also, again, want to thank the dairy farmers of New Zealand for their hard work, their contribution, along with other farmers, to making New Zealand great again.

The question is that the motion be agreed to.

Thank you, Madam Speaker. It’s a pleasure to take a call this evening on this bill. The Minister of Agriculture has just mentioned the Primary Production Committee reported back unanimously agreeing to this bill.

Can I first acknowledge the Hon Damien O’Connor, who originally drove this piece of legislation, and then acknowledge the Minister, who has just taken his seat, for continuing to shepherd this piece of legislation through the House. I just want to also acknowledge my Primary Production Committee colleagues. I do believe—and I’m not biased, but I do believe—that we are the best select committee. Actually, I think, Madam Speaker, you might agree with that too. I was listening earlier to a bill being discussed in the House—the Customer and Product Data Bill—and I heard one of the speakers talk about the collegiality across the House with that piece of legislation, and I have to say that whilst that was true and it was good to see, it’s nothing as collegial as you might find in the Primary Production Committee.

This piece of legislation deals with dairy quota allocation, basically, and it fits in beautifully with the goal of the current Government—and our country, in fact, and our farmers—to double export values around the world. This piece of legislation, while it doesn’t state it explicitly, will also help create jobs across the country, create fairness among the sector and our producers, and give certainty to the sector. New Zealand has always been a country of entrepreneurs and innovators, with our number eight wire—I won’t say “mentality”, but innovativeness, I guess. I think that this piece of legislation, while it doesn’t necessarily state these things explicitly, also goes to support all of those things that we in New Zealand are so well known for.

This bill was open for submissions from 18 October to 17 November last year, and the committee received two submissions—one that a submitter spoke to orally. It was quite interesting that we only had two submissions. I thought that we might have had some more interest, given that this is such an interesting topic, and I know my colleague Mark Cameron will have lots to say about this subject, considering he is a passionate dairy farmer—I’m looking forward to his speech.

This piece of legislation simply amends the Dairy Industry Restructuring Act 2001, or the DIRA, as we refer to it in this bill and probably throughout other members’ contributions this evening. The background to this piece of legislation—there may be people out there who are glued to their televisions this evening listening to Parliament TV and unsure what this actually means. Our dairy export quotas are negotiated, often as part of international free trade—not free trade necessarily; international trade agreements. And some of these are agreed as part of bilateral free-trade agreements. The information that we’ve received in our select committee with regard to this is that it’s been a little bit—I would argue—complicated for someone who may be on the outside looking in, trying to understand how quotas have been allocated in the past. Prior to this piece of legislation being introduced to the House, it was allocated on the proportion, basically, of the milk collected by participants directly from dairy farmers, etc., across New Zealand.

Things have also changed in the last few years, because the prior piece of legislation, the Act itself, pertained only to dairy. We know that bovine dairy is not the only product now that we find that we are exporting across the country. When I talked about this piece of legislation creating jobs and creating fairness, I was referring to the fact that there have been a number of changes in the sector itself. We’re not just milking dairy cows. We now have a range of different products that are being made—for example, deer milk, goat milk, cheese, and other types of products that have not been so common in the past, and we are starting to see more of those types of businesses come to the fore. There are lots of innovators across the country. Lewis Road Creamery is one that I can think of also.

Because of the fact that the quota system was based on the amount of milk that was collected, and a certain percentage of milk—I don’t have that specific number in front of me—had to be provided, which actually, effectively, shut out some of those smaller businesses and didn’t allow them the opportunity to become part of what is a high-value export market, we agreed wholeheartedly with this piece of legislation, and that it does need to change to allow those smaller players into the fray.

We did hear concern from one of the submitters, who did not want to see, necessarily, the changes to the quota system as such, because they were worried or concerned that there might be an opportunity for the system to be gamed. We questioned officials on that and we heard back quite clearly that it would be extremely and highly unlikely that we would see a situation like that, so the committee didn’t agree to the suggested change by that that particular submitter.

I’ve already talked about the inclusion of non-bovine dairy products. Other changes that the select committee made to this bill were with regard to the quota compliance programme—the QCP. What the bill required initially was that businesses would obtain a QCP before being eligible for export licences. Previously, they could apply for these licences without having a QCP, but this new rule aims to prevent businesses from applying for licences without the intent to use them. That could have been something that we may well have seen, and therefore people may have got additional quota without the actual intent to use that quota. We think that the changes we made in select committee, the amendment we have made, would not allow for that to happen. The amendment that we’ve made around the QCP requirement relates to the fact that the quota was going to be based on the three years prior to this legislation coming into force, to determine the eligible quota allocation for 2026. There was a little bit of concern from those smaller players who haven’t been part of this, haven’t been able to trade and have a quota system as such, because they didn’t have enough product to export. So we have made a change that would allow for those who don’t have that export history to be part of this system so long as they obtain a QCP before exporting.

I want to finish up by acknowledging the good work of the select committee—the fact that we work collegially, as I mentioned before, for the good of the farming sector, the agricultural sector in New Zealand, because we do acknowledge and we do understand, as does this side of the House, the value of the agriculture sector to our economy here in New Zealand. We will do what we can in order to support that sector; therefore, I commend this bill to the House.

Thank you, Madam Speaker. Yes, the Dairy Industry Restructuring Act is a thing that you might be surprised to see a component of the amendment of being spoken in support of by the Green Party. Why, you might ask?

💬 DEPUTY SPEAKER: I’m not asking. You’re going to tell the House.

I am; I’m going to tell the House. Why, one might ask? “Dairy dairy everywhere, nor any drop to drink”, in the famous words of Samuel Coleridge. But what we have, and others have spoken to it, including the Minister, is this recognition that a large part of what gives value to New Zealand export products is that firm reputation for being a producer of natural and good quality food. Now, part of that reputation might be fictional, but the Green Party, and I think all of us, might like to make that not a fiction. Let’s make that a reality. Let’s make that good reputation something that is true and something that we stand by.

What this bill does is it allows the smaller players in dairy—and, as my colleague Jo Luxton pointed out, those who may be producing other than bovine milk; they may be producing sheep milk or deer milk or other kinds of milk—into that vital export market quota. And therefore it allows them to get a part of that export quota which is so essential to the agricultural sector in this country.

We’re grappling with another bill right now, and I won’t dwell on this, because there’ll be a chance to later, but in one of the submissions made by the Dairy Companies Association of New Zealand on the gene tech bill, they made a general point about our dependency on export markets. They said, “We do not have the luxury of a large country that sells a large proportion of its product to its own domestic market. New Zealand’s major primary sectors of dairy, meat, fisheries, wine, forestry, and selected horticulture products export up to 95 percent of their output”—we know that’s true of the dairy industry—“a level not matched in other developed countries. The additional factor is the export value of New Zealand derives from complex finished, or near-finished, food products, such as infant formula, as opposed to more basic commodities such as grain, cotton, or soy.”

Now, this just goes to drive home the point that given that 95 percent of our product will be exported, access to those export quotas is vital for New Zealand businesses, and this bill facilitates the diversification of that access to those quotas. The Green Party sees that as a good thing, because this allows those new entrants, who are able to come in—they might include smaller family businesses, they might include new smaller cooperatives, they might include iwi dairy producers, they might include regenerative or organic farmers who are needing to build their reputation by producing high-quality products that overseas customers want. That contributes to our good name in the global market place, because if we are able to meet the global customer demand for high-quality products that have been produced in a way that is sustainable, that is good for animal welfare, that is good for dealing with the climate, then any step we can take in that direction is a good thing for New Zealand and for the world and for those producers who are doing that.

Now, in terms of an overall vision of where we would like to see New Zealand heading, this sort of amendment takes us in the right direction, because I believe we can be a true clean, green food producer. I believe we can be a nation that takes to its heart the principle that we need to be able to produce food in a way that doesn’t harm the viability of those core things that we depend on—the stability of the climate, the cleanliness of our river and our groundwater, the integrity of our biodiversity and our wetlands. It is possible for us to do all of those things. That might mean us having some tough conversations about land use change, about whether we should have quite so many dairy cows, and you know where we stand on that. That is not in any way to vilify farmers.

💬 Hon Members: Ha, ha!

It really isn’t. It really isn’t, because I know that farmers in this country are able to do many things. They are able to farm diversely. They are able to do different things and find more inventive and innovative ways of making a credible buck off the land, which, we all acknowledge they need to be able to do. But if this allows somebody to innovate and find a way to make a living from producing sheep milk, and create a boutique product or a niche product that is going to be saleable to the world market, and they can now get some quota to prove that point, good luck to them—all power to them—and that is for the good of our whole country.

So I only outline this by way of explaining and expressing why we as Te Pāti Kākāriki, the Green Party, see this as a good change, a good step in the direction that we want to be going in.

Another thing is diversity in our production is resilience. Our ability to produce things on a number of frameworks, a number of products—plant-based, animal-based, forestry products, diverse dairy products—this is a good thing for our overall resilience. The more that we are able to produce things that are consistent with our values and the values that we know that a dedicated proportion of the global customer population want to buy—they want natural products, they want high-quality products, and we know that those markets exist and we should be here willing to meet those markets. One day, perhaps, one of those milks that will be counted in the non-bovine dairy quota will be organically grown oat milk from Southland. Who knows? Why would—

💬 Hon Mark Patterson: Oat juice.

But what’s your problem with juice? We don’t have a problem with juice. I don’t care if you call it juice or milk. The point is, if farmers can make a living producing a product that is viable and valuable and better for the environment, all power to them, and that is the direction we should be going in. We genuinely believe that that is for the best of the country.

The bill is supported. We have got the best select committee in the Parliament, admirably chaired by our dear chair over there, Mark Cameron, who does a sterling job of keeping us in order and sharing around the burden of the responsibility.

This bill will widen quota access to a range of different types of businesses. It will support smaller companies to scale up by either providing new access to quotas for those already eligible, potentially providing export licences in greater numbers than under the status quo—always subvert the dominant paradigm. It will ensure that participants have demonstrated the ability to export the relevant products, and increase utilisation by aligning capability and eligibility. The bill also creates a regulation-making power. This enables 10 percent of export licences for a designated market listed in Schedule 5A of the Act to be reserved for exporters who would otherwise be ineligible and exporters only eligible for fewer than 200 tonnes of product. We think this is a useful step.

It is nice when the House can agree on something. And, honestly, I think it would be good if we tried to find out more things that we agree on. I certainly hope, in our upcoming deliberations on the gene tech bill, that we are able to have some honest conversations about what is in the best interests of that reputation that this bill helps us to build up, and we should be thinking about how else we are building that reputation with other pieces of legislation through the House. We will be supporting this bill. Thank you, Madam Speaker, and thank you to my colleagues on the Primary Production Committee.

Thank you, Madam Speaker, and thank you for the opportunity to speak to this piece of legislation and join the House tonight. I just want to acknowledge Minister McClay, who’s in the House, as being part of the overall oratory for this legislation.

A bit of context and full disclosure: I am a dairy farmer, as you are all well aware, and a Fonterra supplier and I absolutely love rural New Zealand. The speech I’m about to give is less so about the members of the House and is actually to celebrate the people outside of it, and the Speaker herself is a dairy farmer and will be cognisant of the wonderful people—

💬 DEPUTY SPEAKER: That’s the second time I’ve allowed myself to be brought into the debate tonight, so thank you. Carry on.

—and acknowledge rural New Zealand and the dairy farmers in it. No better group of people, I would argue, to represent dairy farmers—$26 billion to $27 billion, and it will only continue to grow. This piece of legislation is indicative of the reason, and the people, I came to Parliament, as I am one.

I started my career as a little guy in a cowshed, a “ten aside”, and I don’t want to overindulge the House, but just for the moment I will—if I could, if they would bear with me. A “ten aside” cowshed—some won’t know what they look like; Mr Damien O’Connor certainly would. He’s probably cognisant of a “step-up”. We grew up with those kind of cowsheds. Hasn’t the industry that we all now represent in rural New Zealand changed? Gracious me! Rotary cowsheds, modern technology, farmers invested in better outcomes—what a wonderful story. That is Kiwi. That is so New Zealand. And we are part of that, on a global stage. How could we not pass this bill into law that gives that industry—which I would say is the bedrock of rural New Zealand—a continued future in terms of export earnings.

Another point, that Mr Abel rightly pointed out, we’ve got a fantastic committee. I am biased. Suze Redmayne is part of it, Steve Abel, Jo Luxton, others—fantastic people, great to work with. They have seen the common sense that this legislation brings, and, by virtue, we’ve got rid of all the political theatricality. We just said, “Let’s grow our economy.” The Government currently has great aspirations to see a doubling of revenue export earnings, and this will embolden that.

I won’t over-litigate the complexities of the bill. Other members have already spoken to it. I think it highlights the importance of creating an environment where new entrants can come in and we do what we do so damnably well in New Zealand, in the land of milk and honey, and that is farm. I won’t over-litigate it any further. I commend this bill.

It’s a pleasure to rise on behalf of New Zealand First for this dairy bill, the Dairy Industry Restructuring (Export Licences Allocation) Amendment Bill, or the amendments we’re putting through to the parent Act, the Dairy Industry Restructuring Act. Today, the Act is probably one of the most significant—certainly from a commerce perspective—Acts that’s ever gone through this Parliament. It is an incredibly important piece of legislation that allowed the coming together; the bypassing of the Commerce Commission to bring the Kiwi dairy co-operative, which would be—you’re from Taranaki, Madam Speaker, so I’d presume you were Kiwi? Mark Cameron in Northland, he was probably Dairy Group. Were you New Zealand Dairy Group in—

💬 Grant McCallum: Northland.

Northland. Well, Northland got brought into Dairy Group in the end. There was only—

💬 David MacLeod: Kiwi.

Into Kiwi. But it was very tribal—very tribal. There was Tui down in the South Island—that was amalgamation through the 1990s. There was a massive amalgamation of small dairy co-ops that have ended up today with Fonterra because of this legislation. It is our most important company. The nation rises and falls on its fortunes more than a lot of people in this House would understand or care to believe.

I just would like to put on the record: because of that significance, the fact that Fonterra are selling their brands at the moment, that this Parliament allowed the formation of Fonterra, I’m disappointed this Parliament hasn’t put more scrutiny over that deal; those—now Mainland that they’re looking at splitting off and selling—are iconic New Zealand brands. I wrote to both the Finance and Expenditure Committee and the Primary Production Committee to ask them to bring Fonterra in to explain to the Parliament why brands that they had been entrusted with, they were looking at selling off. And I was disappointed to get a negative response from both those select committees. I think the Parliament has failed a little bit in this regard to—

💬 Grant McCallum: Farmers’ decision.

Well, Grant McCallum has just said it’s the farmers’ decision, and to a point it is. But the farmers also have to realise that this Parliament granted them the ability to form a near monopoly. The parent legislation was designed to foster some competition, and that’s where, I guess if we fast-forward to today, we are with this bill.

This is a modest amendment put forward by the Minister of Agriculture to allow quota allocation of export licences to smaller operators to make it easy for them to get some access, which will allow, potentially, for some of those smaller operators to grow. They will not grow into being the next Fonterra, but they might grow into being the next Tatua, which is a highly profitable smaller dairy co-operative. Lewis Road, for example, is another company that has done very well.

This bill enables that in a modest way, so New Zealand First absolutely supports it—it’s a very sensible move and made for good reasons and I’m pleased that it’s had cross-party support across the Parliament. But I think, in doing that, we’ve actually missed the forest for the trees here—the really big deal that’s going down in terms of value-add, and potentially trading away those brand businesses that have been built over generations when we’ve got technology like precision fermentation coming down the line that could disrupt the very ingredients that Fonterra are backing. That’s their strategy: is now to go fully down that ingredients path, which are ripe for disruption, and this Parliament should have shown more interest in that deal.

💬 Hon Damien O’Connor: Well, you’re in Government.

But, well, both select committees who were bipartisan have turned it down, so that would have been the first step.

Anyway, I have digressed a little bit from the bill, Madam Speaker, but I did want to put that on the record because we have missed the forest for the trees here. There’s some really big—

💬 DEPUTY SPEAKER: It’s still relevant to the topic.

It is still relevant to the—

💬 DEPUTY SPEAKER: But you can come back to the bill now.

So we do support it. New Zealand First does support the measures in this bill that will allow for more diversification of access to our smaller, emerging, value-added companies to get into some of those export markets, and particularly in this time when you’ve got a situation where, actually, trade access is becoming incredibly important as the world is in some tumult around the deglobalisation, essentially, around trade and trade barriers going up.

So these quotas, even though they’re not used to their maximum degree or haven’t been for some time—for most years—could become very, very sought after indeed in the coming years, and to carve out some space for new entrants is a very good move from the Minister.

I commend the Primary Production Committee for having shepherded this through, and we look forward to the third reading. Thank you.

Tēnā rā koe e te Pīka, otirā tēnā rā tātou e te Whare. Before Madam Speaker exits the chair, I just want to say happy birthday. I know that you’re getting your SuperGold card today, so tēnā rawa atu ki a koe. Tēnā rā tātou e te Whare, e tū ana ahau ki te waha i ngā kōrero mō Te Pāti Māori i te pō nei. E mihi ana au ki te Minita, e Todd McClay. E mihi ana au hoki ki a koe Mark te tiamana o te komiti whakahaere.

[So I acknowledge you. Greetings to the House. I stand to deliver the speech on behalf of the Māori Party this evening. I acknowledge the Minister, Todd McClay. I also acknowledge you, Mark, the chairperson of the select committee.]

I rise on behalf of Te Pāti Māori tonight to support this bill in its second reading. However, I do want to take this opportunity to add my own flavour, as I usually do, and add my 2c on to the broader context of this, which affects our rohe and our electorate as Māori. I am the Hauraki-Waikato MP, and knowing a Māori seat, that’s eight general seats in one, so it’s very large. That’s a lot of farmland.

Hoki ake nei au ki tōku awa koiora me ngōna pikonga, he kura tangihia o te mātāmuri. E whakawhiti atu ana ai au ki te kōpū mānia o Kirikiriroa me ngōna māra kai, te ngāwhā whakatipu ake o te whenua mōmona hei kawe ki Ngāruawāhia, te huihuinga o te tangata.

[I return to my life-giving river and its bends, each bend more beautiful than the last. Across the smooth belly of Kirikiriroa, its gardens bursting with the fullness of good things, towards the meeting place at Ngāruawāhia.]

These are the words spoken by Kīngi Tāwhiao, referring to the jewel that is Te Awa o Waikato, each bend more beautiful than the last.

The people of Waikato have a complicated history with milk. Like other iwi, our lands were illegally, excessively, and unjustly confiscated to provide for New Zealand’s dairy and larger export growth. The predicament that we face as Waikato is the mere fact that 1.2 million acres of land was wrongly confiscated off us and the majority of our land is being used for farming. The majority of our people are kaimahi, the hard-working factory workers in these industries like AAFCO, Open Country Dairy, Tegel, Fonterra, etc.

I’m fourth generation. My two grandfathers were also in the meatworks, so it is in our whakapapa, but I find it ironic that our country is one of the largest food providers in the world, exporting the world’s highest quality of dairy and meat, yet its own workers can’t even afford the very own bread and butter that they make on their own land. So it is an experience that we face as the rohe of Waikato and many other iwis across the country. So, yeah, it is a raw reality that we face.

However, while Te Pāti Māori supports this bill, it wishes to place on to the record that although iwi Māori agricultural interests are intertwined within New Zealand’s economy, there is and always has been a desire to transition to new economies of the future. We believe that there is a role and responsibility on the Government to ensure food security and availability for those who cannot afford kai here at home.

Te Pāti Māori’s vision for food security: also a project that we worked on with the Ministry for Primary Industries, prior to me entering in this job, around food sovereignty and helping whānau that own Māori land to develop different types of māra kais throughout their marae that support kuras, so that could be another option for school lunches. But we do support the use of quotas to ensure that the people of Aotearoa continue to have access to these products here at home. While export growth favours those who benefit from it most, food security here at home must surely benefit us all. Nō reira, tēnā rā tātou e te Whare. Tēnā rā koe e te Pīka.

Kia ora, Mr Speaker. This is something remarkable. I feel refreshed with the love across the House—the love across the House.

💬 Grant McCallum: I always knew you loved cows!

We do, we do love dairy on this side of the House as well. In fact, I am feeling rather nostalgic, because when I lived in France, I used to milk goats and sheep.

💬 Cameron Luxton: What was its name?

His name? Male goats don’t have teats. And I used to milk a cow occasionally, and we used to make a very nice little cheese called a Pélardon. Pélardon is typically eaten at about one and a half weeks old, and it needs a bit of air, needs a bit of moisture. And what happens with that milk, turned into cheese, over the course of that one and a half weeks, with a bit of moist air flowing across it, is it forms a sort of a crust around the cheese that is like a merino’s backside in shape, but when you cut into it with a glass of red wine, it is fantastic; there is nothing better.

We support this bill—we support this bill—because we see the opportunity here for real value for our small, value-added producers, those farmers who are practising regenerative, organic agriculture who want to access a market and who understand that the markets that they are accessing want our produce to be quality. They want our produce to be full of environmental big ticks—they don’t want gene-edited cheese and milk; they want the real thing. This bill gives us an opportunity to go that way. This provisioning for ensuring 10 percent of licences for what have been, up until recently, ineligible small producers, will help grow those small dairy businesses. That completely aligns with our goals to help adapt to a changing world, to help our rural communities grow.

We’ve often heard the rhetoric across the House of, you know, “We’re ending the war on farmers.” This is a nonsense, really. What we are doing here, and what we all really want, is for our rural communities to thrive. We don’t need to seed division. We need to look for moments like this, where we find common cause to support our rural communities, who want to produce, who want secure markets, who want their brand to be strong, who simply want the arguments to end so that they can get on and do what they know is right. This is a really interesting and valuable addition, this Dairy Industry Restructuring (Export Licences Allocation) Amendment Bill, because it will allow for growth in the organic dairy sector.

We are in support of this bill. We’re in support of this bill because it offers so many opportunities to those innovative farmers who are reducing emissions, looking after their animals, and making money from doing good in their environment—restoring the whenua, replanting riparian strips. This bill is about adding value, rather than volume, but ensuring that that value has an export market that understands where it is coming from and what it can do for Aotearoa and for our reputation.

It would be remiss of me to not mention the other bill that we hope, across the House, we achieve the same sort of support for. We do not need gene-edited milk, or gene-edited anything, in Aotearoa. Kia ora.

Thank you, Mr Speaker. Well, isn’t it nice we’ve all got the warm fuzzies because we’ve all finally agreed on something? We’ve agreed that we fully support this bill to go through the House and to develop and open up our trade and export for the little guys who can get out there and put New Zealand even further on the global stage.

I want to commend the Primary Production Committee for a fine piece of work and getting everyone across the line with this, and to the Minister for his work in this bill. It makes sense for all of us to be expanding our opportunities and heading for growth in whatever we can, so I commend the bill to the House.

Tēnā koe e te Māngai o te Whare, otirā tātou katoa e noho harikoa ana, e katakata ana i raro i tō tātou nei whakaaro tahi ki te tautoko i tēnei pire.

E rere rā te kirīmi i roto i ngā kēna nei

Kia tika hāwerewere, kei rere pārorirori

Kia rite ai ngā nama

[Thank you, Mr Speaker, and all of us here, happy and laughing in like mind supporting this bill.

Flow on, cream,

Into those cans!

Go straight in,

Don’t go astray,

So our debts can be paid!]

That is the chorus of a waiata written by Tā Āpirana Nohopari Turupa Ngata in 1924. I had the privilege of listening to a kōrero by also the late great master carver Pine Taiapa recounting the story of when this was written.

As I’ve said, I stand also in support of the Dairy Industry Restructuring (Export Licences Allocation) Amendment Bill. The message that resonates with me is that the dream and the vision remain the same. Ever since 1924, Tā Āpirana Ngata had a vision. He had a vision that remains the same, from my perspective, for people of Ikaroa-Rāwhiti and people of Aotearoa today. That is the utilisation of our land; economic development for the benefit of our whānau.

When Tā Āpirana wrote this song—I’m going to go through it verse by verse, because, actually, the formula, the vision, and the future of this bill was written by Tā Āpirana Ngata in 1924, so far as I’m concerned. You know, I’ve heard people quoting Tā Āpirana Ngata and referring to Tā Āpirana Ngata—and, in my opinion, not always accurately or fairly, and that is also the whakaaro of his whānau. However, I am confident that, looking down today, Tā Āpirana Ngata’s going, “Ka pai. Kei te whakatinana rātou i ōku hiahia.”

[“Very good. They are executing my wishes.”]

They’re fulfilling the dream that he also made a lot of headway in fulfilling.

So, in his first verse, he talks about how dairy farming is going to be.

Tērā te mahi pai rawa

E kī ana mai he mahi rā,

E puta ai ngā moni nunui noa

E whanga rā e tama mā ki ngā pei marama kua riro kē i ngā nama,

Auē ngā wawata.

[There’s some really good work

We’ve been told about,

Work that will make us

Lots and lots of money!

Just wait, you fellows,

For your monthly pay -

But our debts have taken it,

So much for our dreams!]

Here, he talks about how dairy is going to be such an opportunity, particularly for veterans who returned with nothing. He said here is our opportunity to fulfil your dreams and allow you to fulfil them yourselves through hard work and utilisation of our whenua and kotahitanga. Then he talks about how he made the trip. It’s a shame, Madam Speaker—I mean, it’s wonderful to see you here, Mr Speaker. But he made a trip to Taranaki to see Māui Pōmare and to learn what Ngati Porou, and, indeed, further abroad, could learn from Taranaki about dairy farming. So began Ngati Porou dairy farming, and also initiatives like the Waiapu Farmers’ Co-operative.

I had the privilege of growing up in the Tikitiki Waiapu Farmers as a rangatahi, and so it’s really endearing to remember the true whakapapa of those buildings throughout the coast, in that it was a vision Tā Āpirana Ngata had around dairy and collectives. I think that’s the beautiful part of this verse. We talk about kotahitanga all the time and working together all the time, and here is a true example, of Tā Āpirana Ngata going to Taranaki and learning from Māui Pōmare. So tēnei te mihi atu ki a koutou katoa ngā uri o Taranaki. [So I acknowledge you all, the descendants of Taranaki.]

Then he goes on to talk about the progress:

Tērā te pata rongonui,

He Nāti te ingoa.

Te wāhi rā i mahia ai

ko Ruatorea.

[There’s some famous butter,

“Nāti” is its name.

The place where they make it

Is Ruatorea.]

Then there was the famous butter called Nāti. Nāti is a colloquialism for people of Ngati Porou, and we talk about he wīwī, he Nāti, he whanoke [the Ngati Porou people, strong-willed and daring], prolific, plentiful, and resilient. So that was the name of this butter. You know, by looking at me, you’d think I’d eaten a lot of—you know, the hips; there’s a bit of Nāti butter on there—but no, it’s just other wonderful New Zealand products.

The important part in there, too: ko Ruatōria. This was produced in Ruatōria, and now, you know, we hear a lot about the Fonterras. A lot of the dairy industry has moved to big, major players. Reflecting on this waiata and our history in small places like the Tairāwhiti, the opportunities that this bill offers are very, very exciting, because we don’t have the capacity any more to build huge factories in places like Ruatōria, Tikitiki—Tokomaru Bay, perhaps—but we do have the capacity in our Landcorp cooperatives to provide product that can be sent to be manufactured and to get a fair share of the opportunities that will be provided under this bill, to take good-quality East Coast, Taranaki, Wanganui products to the world, and everyone has the opportunity to showcase what we could potentially call boutique products.

The final verse in that waiata is dedicated specifically to the opening of the factory. [Grant McCallum’s phone rings] I don’t require backing tracks, thank you, that side of the House, but I’ll let you know next time—I’ll actually coordinate. Grant, this is our waiata; you bring the sounds. Heoi anō, the last part of the waiata is:

Haramai rā, Pirimia,

māhau te kawanga

E pono ai te mahi nei.

He mahi pai rawa.

[Welcome, Prime Minister,

You are to perform

The opening ceremony

For this food-producing work.]

And it was referring to the Prime Minister of the day. Welcome, Prime Minister, you are to perform the opening, because it is true that this is an excellent industry for us to partake in. So I look forward to one day the Prime Minister of the day attending openings of many smaller boutique initiatives across Aotearoa on Māori land holdings, on non-Māori land holdings—wherever throughout Aotearoa—to take advantage of this opportunity to take even more amazing New Zealand product to the world.

On the issue of cooperatives, I just want to also acknowledge the fact that I’ve been given the fantastic and exciting opportunity as Labour spokesperson on Māori economic development. So, obviously, this is a very relevant bill to that and to my electorate, and, of course, to Aotearoa whānui. So I want to acknowledge some of the current initiatives that I’m sure Āpirana Ngata would’ve smiled fondly upon—initiatives like Miraka, who produce over 300 million litres of milk a year i raro i te whakaaro kotahi [with a unified understanding]. That is another example of kotahitanga. Initiatives like Maui Milk—and both of those initiatives I’ve been asked: why are people so attracted to the Māori economy? It’s because of the values initiatives like this embrace, the values of kaitiakitanga, the nurturing of the resource that they utilise and trade so that it’ll endure for generations. That is the uniqueness, and that is another exciting opportunity. We know the Māori economy has boomed and it will continue to boom under bills like this because people are attracted to the long-term vision that Māori traders have and the whakaaro that goes into not just producing a commodity, a product, but to portraying the pride they have in their whenua, their taonga, and the moemoeā they have for future generations.

Heoi anō rā, hei whakakapi māku i tēnei wā, he hokinga mahara ki a koe e pā, e Tā Apirana Ngata, nāu tēnei moemoea mō tātou o Ngati Porou. I tēnei wā ko te hiahia kei te kite koe kua pūāwai ō whakaaro. Tērā pea anō ka whakatū mai anō ētahi kaupapa pērā i roto i a Ngati Porou, i roto i ngā iwi katoa puta noa i a Aotearoa. Heoi anō, hei kōrero whakamutunga māku, tēnei te mihi atu ki a koe, e te Minita.

[And so, in closing, my thoughts turn to you, Sir Apirana Ngata. This was your dream for us, for Ngati Porou. Now, the hope is that you can see the fruits of your labour. Perhaps another initiative such as that will be established in Ngati Porou, and in all iwi throughout Aotearoa. And now, my final words: I acknowledge you, Minister.]

Also want to acknowledge my colleagues on this side of the House, in particular the Hon Damien O’Connor, who drove—

💬 Hon Todd McClay: He’s a good man.

—he’s a pretty good fella, yeah—this bill, and the Hon Jo Luxton for sharing the technicalities of this bill earlier. I couldn’t end the speech without acknowledging my amazing colleagues from the Primary Production Committee. Heoi anō rā, huri noa ki a tātou, tēnā rawa atu tātou katoa. [I acknowledge everyone here.]

Thank you, Mr Speaker. This bill essentially changes how dairy quotas are administered. It’s not contentious. It’s common sense. It’s all about doubling export receipts. I just want to take time to thank the best select committee in Parliament. Yeah, we miss you, Cushla. We can’t believe you ditched us!

Anyway, I’d also like to thank the Minister. We got the bill through pretty quickly and that was really important because we had to have the Royal assent done by the end of the month to make this bill able to come into effect straight away. I want to shout out to all the dairy farmers, including non-bovine dairy farmers, whom this bill also benefits, and, of course, to the dairy farmers in the mighty Rangitīkei. I commend this bill to the House.

Thank you, Mr Speaker—and in case you’re wondering, I’m not going to sing.

ASSISTANT SPEAKER (Teanau Tuiono): Disappointing.

I’ll leave that to my very able colleague here, who does it beautifully, I can assure you. I’ll also leave it to other members of my family, who do it much better than me.

I am standing up to speak, it will come as no surprise, in support of this bill, partly because of what we got started last time we were in Government but also because it’s about increasing access to export quotas for our smaller dairy producers. We think that’s important. I’d also like to acknowledge the work that the Hon Damien O’Connor has done to open these opportunities for innovative dairy exporters.

It’s always good to round out speeches by just revisiting some of the key points—starting, really, with the background and the understanding that dairy export quotas are often negotiated as part of international trade agreements, and some of those were agreed as part of bilateral free-trade agreement negotiations. These quotas allow New Zealand, in our dairy products, to export to designated international markets at better and beneficial rates, and that includes the US, the United Kingdom, the European Union, Japan, and the Dominican Republic. Now, exporters that do not hold that quota can still export into quota markets, but they’re subject to much higher tariffs and potentially other barriers to trade. This is a good opportunity for us, through this bill, to address some of those challenges.

The original dairy export quota allocation system was established back in 2007, so we can see that’s almost 20 years ago. Since that time, there have been a number of things that have changed. There’s been an increase in the diversity of business models in the industry, including—and we’ve heard a lot of mentions this evening—companies that do not collect milk. There’s been a low utilisation of dairy export quotas over the last 10 years, and we’ve also progressed and agreed to new free-trade agreements with the UK and the EU, both of which have quota allocations that dairy sector participants have indicated a high level of interest in.

So if this is a bill about increasing access to export quotas for our smaller dairy producers, then it’s also good to look at four of the key factors of that. One is the export volume history - based allocation. This change has widened access to export quotas beyond just those companies that collect large volumes of milk solids. The next is reserve quotas, where the goal is to support smaller and niche businesses that may not yet have the scale to meet the regular criteria but do show potential for growth. The inclusion of non-bovine dairy—and we’ve talked a little bit about that, and one member confessed to milking goats in France, so there’s definitely opportunities here for non-bovine. This futureproofs the system to accommodate new sectors within the dairy industry. And, of course, really importantly, there is compliance and oversight: this bill also introduces measures for compliance, which are very, very important.

Ultimately, what we’re looking at and what we’re supporting in this bill is increasing access for smaller producers. We’re looking at opening up opportunities for smaller companies here in New Zealand to diversify into niche products. We are empowering regional development, and that’s a really important element—creating new regional development opportunities with tangible benefits to local communities. And, overall, we are enabling these companies to innovate and compete more effectively in global markets. That does increase our access and their access to export quotas, and that’s what we know they need. It rewards innovation and entrepreneurship in our proud farming communities, and that’s why we’re supporting this bill.

Thank you, Mr Speaker. Just before I do go on to the content of the Dairy Industry Restructuring (Export Licences Allocation) Amendment Bill, I do want to talk about the dairy industry that has actually held our economy strong for decades and decades. And didn’t it show through the pandemic stages there? At the worst of the pandemic, when everybody was in lockdown, weren’t we a lucky country to have the strong dairy industry that we had? We can thank the many producers that we have in our country. And, of course, the Dairy Industry Restructuring Act, which helped the formation of Fonterra, also saw the development of the global dairy trade, which arguably has actually created billions of dollars’ worth of value for our country as well.

I would like to thank, firstly, the former Minister Damien O’Connor and also the current Minister, Todd McClay, for championing this bill to where it is today. As the previous speaker has just said, this does provide greater opportunities for the country in realising more value but also for the smaller exporters to get the opportunity to get a part of the quota that they don’t have access to at this time and also, for the producers of other non-bovine milk—the likes of sheep, goat, and deer—opening it up for them as well.

This has a lot of positives all round, this bill. Thank you very much to the Primary Production Committee, which unfortunately I wasn’t part of. But their humbleness has shown us tonight that they were a very good and harmonious group to be able to get this work done. I commend the bill to the House.

Mr Speaker, thank you very much for this good opportunity to say a few words on this. Probably 30 years ago, people would have thought you never wanted or needed a bill like this. In fact, the world and New Zealand was embarking upon a free-trade agenda that would have kind of gotten rid of all these barriers in some of these very important markets, and dairy has always been a critical industry for us. We’ve done our best, and the trade Minister there and many before him have tried to break down the barriers. But the reality is that there are still quotas or limitations on the volumes of product that can go into markets, particularly around agricultural products, and in dairy in particular.

The US, the UK, the EU, Japan, and the Dominican Republic are the higher-value markets that we sell dairy products into, but there are limitations on volume, and there has been a lot of explanation over the reasons and the technical issues of this bill. I’m not going to repeat those, other than to say that it wasn’t a foregone conclusion that this would be in the House, either. In fact, we’d done the work in Government to go out and talk with the industry about the need to adjust what was a kind of an assumed structure—that is, the volume of milk that you picked up from the farmers as a percentage of the total volume; it gave you quota access into the markets. It’s pretty simple: Fonterra got most of it, and a couple of other dairy companies, but there were emerging new and innovative players in the dairy market.

We’d negotiated better access into the UK and the EU, so we, in Government, considered that it was important to take a look at the quota market access mechanisms, and there wasn’t enthusiasm, as I say, from the existing players. Fonterra was quite happy just to get automatic allocation of that. Keeping out potential players and competitors is probably not a bad strategy, but, in fact, it is not a good long-term one for “New Zealand Inc.”

So this bill was designed and had its consultation and its early development. Then it’s come through the Primary Production Committee to be a vehicle for innovation in the dairy sector, and it’s even more important now, given that Fonterra have indicated that they’re going to step back from some of the consumer brand sales, back into an ingredients strategy. I’m not going to go into the whys and wherefores of that at this point in time, other than to say that we need to look for innovative players in the dairy industry that will add value to milk powder and the core components of milk here and get as much as we possibly can, particularly if we’re going to double the value of our exports.

What this bill does, of course, is it just changes access to that and says that if you’ve exported—and probably anyone exporting outside the main players, anything in dairy around the world now, they’re pretty smart to have survived. They deserve to have some protection and a greater access as of right into some of these higher-value markets.

I go back and say again that the assumption that quotas would be kind of gone by now was a wishful hope and thought back in the 1980s and 1990s. The free-trade agreement that we—actually, Labour—negotiated with China, once again, kind of brought some comfort and ease to the dairy industry to say, “Well, here’s an easy market—a huge market. We’ll just carry on, and the quota markets aren’t that important. We’ve got some going to the US and the EU.”, but, in fact, we’d neglected some of them, and many of the quotas hadn’t been taken up in full. So we were at risk—and still are at risk, if we don’t use these quota markets properly, as intended—that the country that we’ve negotiated them with will say, “You haven’t utilised them all, so therefore we’ll take back some of that volume.” That’s why we need good, robust trade agreements—so that we can protect the access that we have negotiated.

But moving forward, and not taking any of this quota market for granted now and appreciating the fact that these are the higher-value markets, we’ve got to push the boundaries of those volumes in any way we can. So it will be new and emerging companies, and what I’d say is that Fonterra, as an ingredients company, will be providing high-quality ingredients offshore to many of the traders and many of the people who are going to then turn those ingredients into high-value consumer products, which is another issue.

But I hope they have the same enthusiasm to supply New Zealand companies with the same ingredients so that they can develop their own products and export into these markets. They may say, “Well, we don’t have to be quite so generous.”, but we say—as Mr Cameron said here—that Fonterra is a construct of this Parliament. Exemptions from the Commerce Act were to allow the scale, the scope, and the vision for Fonterra to thrive. It’s been through a few ups and downs, but it shouldn’t do that at the expense of others who might want to grow and thrive, as well.

So in passing this piece of legislation, we have to make sure that the intent, as it was at the start of this process, is carried right through when we do allocate this quota market access. Now, that doesn’t guarantee, of course, that people are going to make a whole lot of money going to the market. They’re still going to have to be good individual companies and they’re still going to have to have good products, but, ultimately, this provides a vehicle for the kind of growth and innovation that we need to see in the dairy industry.

Can I just go back and say that, again, in the early stages of this process, there wasn’t a great deal of enthusiasm, as I said, from the industry, and neither was there from officials—they don’t like kind of stirring things up, I have to say. I’m not dumping on them; I’m saying that stability is a wonderful ideal, but, actually, some healthy tension in the market, particularly in our biggest industry, is very, very good for each and every one of us. The Ministry for Primary Industries will be allocated the responsibility to oversee this process, and I hope that they do it—as they usually do—in the best possible way.

The dairy industry is a very proud one. Mr Patterson spoke of it in the way he should have, and it’s very important to us. But if we make mistakes, it can affect our economy very, very quickly. We are about 2.5 percent of the total global production of milk. We trade, or fill the gaps where it’s needed, at about 35 percent of the total global trade of dairy products, which is very significant. But we shouldn’t ever get ahead of ourselves and think that because we trade a large volume, we have a large global influence.

Indeed, the Minister of Trade and Investment, who is also the Minister of Agriculture, is now talking to India and I wish him all the very best. India has a massive dairy industry. They’re very sensitive to traded product around the world. If he can get a quota into India, that will be a wonderful achievement, to go along with the comprehensive free-trade agreement. It might be possible, but, again, we’re making sure that the quotas are into high-value markets that make it worthwhile to have the additional administrative compliance costs with that, so India might not be one of those markets that people rush to trade into. In the meantime, the US, the UK, the EU, Japan, and the Dominican Republic all do provide high-value opportunities for our exporters, so people now will have the opportunity, hopefully, to get zero tariff, and if not, certainly under the quota limitations that are currently into those markets. On top of it, as has been said before, the new innovation in goat milk and sheep milk that we’re starting to see emerge from our country—they too, as producers and exporters, need to be given the opportunity, where possible, to trade into those valuable markets.

So Labour in Opposition supports this piece of legislation, as we did in Government. We wish all those exporters the very best in terms of utilising the opportunities that they now are provided.

Thank you, Mr Speaker. Well, it’s with great pleasure that I rise to support this very logical and sensible bill. As a proud dairy farmer and someone who’s been part of a dairy farming family for many, many years, it’s great to see the harmony around the sector in the House tonight. I look forward to the same level of harmony as we look to pass other Acts of Parliament which affect the dairy sector to quite some degree.

I’d like to commend and thank our Minister, the Hon Todd McClay, for the work he’s done in this space, and acknowledge the previous Minister, the Hon Damien O’Connor, and the work of the Primary Production Committee. I commend this bill to the House.

Motion agreed to.

Bill read a second time.

The bill is set down for committee stage immediately. I declare the House in committee for the consideration of the Dairy Industry Restructuring (Export Licences Allocation) Amendment Bill.

In Committee

Part 1 Amendments relating to international trade with designated markets