Why force Fonterra to subsidise overseas-owned competitors?

News that a Chinese company is looking to purchase another New Zealand dairy company underlines the short-sightedness of requiring Fonterra to continue to subsidise milk supply to its competitors the Green Party said today.

 

National and Labour supported the Dairy Industry Restructuring (New Sunset Provisions) Amendment Bill last week which will extend provisions requiring Fonterra to subsidise its competitors beyond 2011. Many of these competitors are now overseas owned, such as Synlait, which is fully owned by the Chinese government.

 

“It is not in New Zealand's interest to have Fonterra undermined by foreign competitors. In fact, it is astoundingly short-sighted to require Fonterra to continue to subsidise overseas owned competitors,” said Green Party Co-leader, Dr Russel Norman

 

Media reports indicate that the Chinese company, Inner Mongolia Yili Industrial Group, is interested in buying NZ Dairies' Studholme milk plant. NZ Dairies is itself already foreign owned.

 

“The growing interest in NZ dairy production is unsurprising in a finite world with a growing appetite for dairy protein. We can expect on-going interest in our dairy sector from overseas.

 

“Forcing Fonterra to subsidise foreign-owned competitors only makes sense in the discredited world of neo-liberal economic theory. It makes no sense from a New Zealand Inc point-of-view.

 

“Fonterra became an international powerhouse by doing everything against the neo-liberal rulebook. They formed a co-operative, instead of leaving one farmer competing against another. They presented one face to the world, instead of multiple milk processors undercutting each other on the international market.

 

“Fonterra shows the benefits of New Zealanders working together to maximise the economic return to New Zealand. Why should Fonterra be sacrificed to a now questionable economic theory?

 

The Green Party supports Fonterra supplying affordable milk to local processors. Forcing it to subsidise its overseas competitors borders on economic treason,” said Dr Norman.