Enlargement, Concentration and Centralisation in the New Zealand Dairy Industry

Abstract

IN THE YEAR 2001, Fonterra came into being. Fonterra is one of the ten largest dairy manufacturing companies in the world, and its emergence marked the latest phase in the extraordinary evolution of New Zealand's largest export industry (Fonterra, 2002). By the mid1990s New Zealand had been left with only two large co-operative dairy companies, New Zealand Co-operative Dairies based in Hamilton and Kiwi Dairies based in Taranaki. When these two merged to form Fonterra they took with them the rump of the New Zealand Dairy Board, the Wellingtonbased marketing arm of the industry, which had begun life as a Government Statutory Marketing Authority. Today only two small co-operatives exist outside of Fonterra: Tatua in the Waikato Region and Westland on the west coast of South Island The ongoing geographical processes of enlargement, concentration and centralisation led to a fundamental change in the economic and social character of those parts of New Zealand's rural areas (wetter and flatter) where dairying is most common. The purpose of this article is to document these processes of change as a means of showing how farming responds to market forces following the removal of subsidies. The election of the Labour Government in 1984 saw the implementation of a neoliberal economic agenda, and the first area of reform was the removal of most forms of government agricultural assistance (see, for example, Le Heron, 1993; Cloke, 1996; Willis, 2001). While direct subsidies, such as supplementary minimum prices, had not often been enjoyed by dairy farmers, they had received various indirect subsidies and tax breaks. When these were