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NZ monopoly seeks Aussie dairy dominance
3 Nov 2004
Fonterra's bid for National Foods highlights differences in the regulation of primary industries in Australia and New Zealand. Fonterra is a vertically integrated dairy monopoly, and a creature of the New Zealand Labour Government's legislative trampling of its competition regulator four years ago. In contrast, the three big Australian milk processors have never been able to get together. Fonterra is a single-desk export monopoly, a monopoly farmers' co-op, and half of a domestic processing duopoly with Graeme Hart's NZ Dairy Products, which gets all its milk from Fonterra at cost, by law. Fonterra, created by NZ legislation in 2001, is owned by all of the country's dairy farmers and buys all of their milk. It is structured as an "open co-operative", which means farmers can come and go as they please, in theory. The share price is set by Standard & Poor's.
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