This note is not part of the regulations, but is intended to indicate their general effect.
These regulations, which come into force on 1 June 2013, re-enact the Dairy Industry Restructuring (Raw Milk) Regulations 2001 (the former regulations) with some changes.
Overview of regulations
The effect of Part 1 is to require new co-op (Fonterra Co-operative Group Limited) to supply raw milk to independent processors in each season (being a period of 12 months beginning on 1 June in a year). An independent processor is defined in section 5(1) of the Dairy Industry Restructuring Act 2001 (the Act) as a processor of milk or milksolids or dairy products who is not an associated person of new co-op and includes Goodman Fielder New Zealand Limited (being the company that succeeded to the right of New Zealand Dairy Foods Limited to be supplied with raw milk under the regulations following amalgamation with that company in 2006).
Subpart 1 of Part 1 places maximum limits on the total quantity of raw milk that new co-op must supply to independent processors in each season. These limits include an overall limit for all independent processors and individual limits for each independent processor, including a separate individual limit for Goodman Fielder New Zealand Limited.
Subpart 2 of Part 1 contains a regime for managing demand for raw milk by independent processors within the overall limit on supply by new co-op. In particular, it enables the chief executive of the Ministry for Primary Industries (the chief executive) to ration the supply of raw milk to independent processors if, in any season, demand for raw milk is likely to exceed the overall limit on supply to all independent processors in any season.
Subpart 3 of Part 1 specifies terms of supply in relation to the supply of raw milk by new co-op to independent processors. In particular, it enables certain independent processors to require new co-op to offer to supply raw milk at a fixed quarterly price and permits independent processors to require new co-op to supply raw milk at a default price if the parties cannot agree on a price for the supply of the raw milk.
Part 2 contains miscellaneous provisions, including a requirement for new co-op to publish certain information relating to its supply of raw milk under the regulations on its Internet site. It also revokes the former regulations and includes a savings provision relating to advance estimates of raw milk requirements provided by independent processors under the former regulations. The main changes from the former regulations follow.
Maximum limits on supply of raw milk
Regulations 5 to 8 re-enact the maximum limits on supply of raw milk by new co-op to independent processors (regulation 11 of the former regulations) with the following changes:
regulation 5(1) replaces the obligation for new co-op to supply all independent processors in a season with a maximum of 600 million litres of raw milk (regulation 11(2) of the former regulations) with a requirement for new co-op to supply independent processors with a maximum of 795 million litres. For the purposes of section 115(2) of the Act (which provides that the specified limit must not, in the Minister for Primary Industries' opinion, exceed 5% of the good or services produced by, or supplied to, new co-op), regulation 5(2) provides that the Minister may from time to time, and must at intervals of not more than 3 consecutive seasons, review the limit specified in regulation 5(1):
regulation 6 re-enacts the obligation for new co-op to supply each independent processor (except Goodman Fielder New Zealand Limited) with a maximum of 50 million litres of raw milk per season. This limit includes winter milk (defined in regulation 3(1) as raw milk supplied in June and July). However, the cap on supply to each individual independent processor is subject to 2 new requirements. These are the monthly limits specified in regulation 6(2) (which exclude winter milk) and the own supply rule set out in regulation 6(3). The effect of the own supply rule is to disentitle an independent processor, in relation to a season beginning on and after 1 June 2016, from being supplied with raw milk by new co-op if the independent processor's own supply of raw milk in each of the 3 consecutive seasons immediately before the current season was 30 million litres or more per season as specified in returns provided to new co-op under regulation 18(2). Own supply is defined in regulation 3(1) as raw milk collected from dairy farmers by or on behalf of an independent processor (excluding milk supplied to an independent processor under section 108 of the Act).
Estimates, forecasts, and returns
To assist in managing the demand for raw milk in each season within the maximum limits on supply, regulations 9 to 18—
expand on existing requirements for independent processors to provide advance estimates of their raw milk requirements in each season by also requiring independent processors to provide an estimate of their total raw milk requirements for the whole of a current season and for each of the months of the current season specified in regulation 6(2)(a) to (j) (see regulation 12):
re-enact existing requirements for new co-op to provide preliminary and final forecasts of the estimated total raw milk requirements of independent processors in each season based on the estimates provided by independent processors (see regulations 13 to 14):
contain a new obligation requiring new co-op to submit returns to the chief executive relating to its actual supply of raw milk by shareholding farmers and its actual supply of raw milk to independent processors in a previous season (see regulations 16 and 17):
contain a new obligation requiring independent processors (except Goodman Fielder New Zealand Limited) to submit a return to the chief executive stating the quantity of raw milk sourced from its own supply in a previous season (see regulation 18).
Obligation on new co-op to offer to supply raw milk to certain independent processors at fixed quarterly price
Regulation 19 is a new provision that requires new co-op to offer to supply certain independent processors (excluding Goodman Fielder New Zealand Limited) with all of their raw milk requirements for the whole of a current season at a fixed quarterly price. The independent processors eligible for fixed quarterly pricing are those—
Obligation on new co-op to publish information on its Internet site
Regulation 24 requires new co-op to continuously publish certain information on its Internet site. It largely re-enacts regulation 16 of the former regulations. However, regulation 24(1)(a) and (4)(a) are new provisions that require new co-op, in each season, to publish—
a forecast of the total quantity of raw milk to be supplied to new co-op by shareholding farmers in the season; and
the total quantity of raw milk actually supplied to new co-op by shareholding farmers in the season.