A MAF report on the Dairy Industry regulations says the idea of government intervention in the price of milk is unrealistic.
Agriculture Minister David Carter commissioned a MAF report into the DIRA regulations after public concerns over rising on shelf milk prices.
Mr Carter says a report was necessary to look at the way the industry was structured to ensure competition with Fonterra remained strong.
The MAF report said while the DIRA regulations did not ensure competition between processors, without the rules, smaller players would be priced out of the market.
David Carter said the report shows DIRA is working as intended, by helping out smaller processors and preventing a Fonterra monopoly.
Federated Farmers Dairy Spokesperson Lachlan MacKenzie says for producers, a review of the regulations couldn’t come soon enough.
“They’ve got to set up the market, the mechanisms and the computer systems and the like, then they’ve got to make farmers confident that there’s sufficient liquidity in the market that the DIRA changes will work.”
Mr MacKenzie agrees with the report’s conclusion that any governmen
t intervention on the domestic price of milk would do more harm than good.
“Should there be regulation from the government about how much liquidity Fonterra needs to keep in the marketplace?
“The document basically says that good regulation is light regulation, so the less the better.
“We’ve got good commerce commission tools if something goes wrong as it stands now.”
Fonterra has frozen the price of milk domestically for at least the rest of this year.
For more on the DIRA, head here.
