Green Party Agriculture Spokesperson Ian Ewen-Street MP today said he had serious doubts about the "20% rule" which
compels GlobalCo to allow its milk suppliers to make 20% of their weekly production available to competitors.
"It is intended to maintain competition in the domestic market to keep prices low. But, given the additional
costs of advertising and duplication of infrastructure if a single competitor came into the market, the cost of milk is
likely to rise," said Mr Ewen-Street.
"Contestability in the domestic commodity market does not guarantee that prices will drop, The experience of the
electricity industry restructuring, where prices have risen since de-regulation, would indicate that this is a deeply
flawed theory," he said.
Mr Ewen-Street said that the physical problems associated with GlobalCo tankers collecting milk on most days,
and competitor's tankers collecting occasionally, showed that it was a highly impractical suggestion.
"The logistical costs for GlobalCo would be considerable and give the competitor significant advantage. There is
no reason to open the door so widely to competitors in an industry which is based on co-operative ownership by the dairy
farmers of New Zealand," he said.
Mr Ewen-Street said that the regulation of the domestic price of milk would be the simplest solution. "Given
that 95% of our milk production is exported, a "Kiwi share" in the domestic milk industry would enable local consumers
to share in the benefits of consolidating most of our dairy industry into a single company," said Mr Ewen-Street.