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Digest No. 1979

Dairy Industry Restructuring Amendment Bill 2012 (2012 No 11-2)

Date of Introduction: 27 March 2012
Portfolio: Primary Industries
Select Committee: Primary Production
Date report presented; 06 June 2012
Published: 14 June 2012by John McSoriley BA LL.B, BarristerLegislative AnalystP: (04) 817-9626 (Ext. 9626) Caution: This Digest was prepared to assist consideration of the Bill by members of Parliament. It has no official status.Although every effort has been made to ensure accuracy, it should not be taken as a complete or authoritative guide to the Bill. Other sources should be consulted to determine the subsequent official status of the Bill.

Purpose

The aim of this Bill is to amend the Dairy Industry Restructuring Amendment Bill 2001 (the Act) “to introduce a new regime in relation to Fonterra’s milk price setting, proposed capital restructure, and share valuation” [1]   .

The Bill as introduced is described in Bills Digest No 1962.

Main changes to the Bill

Process of setting of milk price to provide for contestability

The bar-2 Bill provides that the farm gate milk price should be set at a level that provides an incentive to Fonterra to operate efficiently (as expressed in the Bill as introduced) “while providing for contestability” (instead of “as far as possible” in the Bill as introduced) in the market for the purchase of milk from farmers . The bar-2 Bill also requires that any assumptions taken into account in calculating the farm gate milk price be “practically feasible for an efficient processor to replicate” (Part 1, Clause 4, deleting Subsection (fa); Clause 13, amending New Sections 150A and 150C).

Freedom of farmers to enter and exit in a winding up and delisting of Fonterra

The bar-2 Bill provides that if the Fonterra fund is wound up, a transitional period of no more than six months is to apply to the reinstatement of the share issue and redemption obligations in order to ensure that there is no delay between a winding up and de-listing of the Fonterra fund (Part 1, Clause 8, amending New Sections 109F, 109G, and 109H).

Copyright: © NZ Parliamentary Library, 2012
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  1. Dairy Industry Restructuring Amendment Bill, 2012 No 11-1, Explanatory note, General policy statement, p. 1.   [back]