NZ to deregulate dairy industry

16 July 1999

NZ to deregulate dairy industry

THE New Zealand government is pushing legislation through to deregulate the countrys dairy industry and allow a single, large co-operative company to be formed.

The new company, dubbed MegaCo-op by farmers, will combine most of the countrys co-operatively owned processing companies and their marketing arm, the New Zealand Dairy Board.

Its formation is being driven by a concern to create an entity with a global reach. It would have exclusive access to the countries and regions that set quotas on imports of dairy products – the European Union, the USA, Japan and Canada – for six and a half years. Those rights would then be phased out over four years.

The industry has agreed to open the domestic market to competition. It will set up and later sell a company with a strong brand that will be able to process 40% of town milk supply in order to satisfy Commerce Commission concerns about market dominance.

Approval for MegaCo-op still depends on approval by the Commerce Commission, a 75% vote in favour by dairy farmers and a successful merger of the two biggest companies, Kiwi and New Zealand Dairy Group.

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