Dairy Industry needs small specialist companies

A dairy industry in which several small companies develop niche markets for specialised milk products, such as "functional" foods with claimed health benefits, is envisaged by Agriculture Minister David Carter. In his first extended interview in 2010, Mr Carter canvassed a range of issues in his portfolio. One was his "helicopter view" of the dairy industry reports Stuff. He said he expected the Dairy Industry Restructuring Act, which set conditions on milk supply and competition when Fonterra was formed in 2001, to be extended when the next "trigger point" came up next year. A ministry discussion document was circulated in the industry late last year and Fonterra's initial response was that it was not opposed to the act's extension. Progress since Fonterra's formation had been satisfactory, Mr Carter said. "But have we diversified enough yet, is the helicopter view of the dairy industry in 2010 the way we expect it and want it to be for the next 20 years? I believe the answer to that is `no'." To allow the industry to diversify and develop, the key was to extend the DIRA, though this was a personal view. His "helicopter view" of a future industry under an extended DIRA was one with more small processors attracting high prices for specialised products in niche markets. Asked if they would be taking Fonterra's cream, he said Fonterra had less ability to extract the best out of niche markets than a small company. "There's room for these companies." He did not think Fonterra had performed to its full potential. "I believe there's more there. I don't expect Fonterra would disagree." That was why it was going through a capital restructuring.