EU poised to block New Zealand butter imports

13-Jul-2006 - Last updated on 19-Jul-2008 at 14:40 GMT

The European Commission has hinted it may ban all new import
licences for New Zealand butter, according to dairy co-op Fonterra,
rounding off a bad week for kiwi butter in Europe.

Fonterra, which supplies all New Zealand butter to the EU, said the Commission indicated on Wednesday night it would stop issuing new licences for an 'interim period'.

The move came after the European Court of Justice this week ruled the EU regime for importing New Zealand butter was illegal, because it discriminated against firms outside of Britain.

The threat to halt licences caps off a bad week for New Zealand butter in Europe, after the country's Anchor butter brand was criticised in the UK for using up extra 'food miles'.

British dairy group Dairy Crest, attempting to promote its native Country Life butter, launched adverts showing Anchor butter travelling 11,000 miles on a rusty ship from New Zealand.

An import licence ban could further hamper Anchor, which sells 64m packs per year in Britain through a licence with Arla Foods UK, one of Dairy Crest's biggest rivals.

Henry van der Heyden, chairman of Fonterra, which owns Anchor, said: "While we are confident we have sufficient product on hand to meet our customers' needs in the short-term, any prolonged delay would compromise our ability to carry on our business with them."

Heyden said the Commission needed to fix its mistake, but that "it is ridiculous for the Commission to react by stopping all trade while they decide what to do next".

A European Commission spokesperson told DairyReporter.com the body was still considering its options: "nothing has been decided, nothing has been suspended." He added the Commission would conform with the European Court of Justice ruling.

The Court, acting on complaints from Germany and Poland, said the current EU system discriminated against potential importers from other EU countries, because licence applications could only be made to UK authorities.

Fonterra has been very much at the centre of the dispute. It holds a monopoly on exports of New Zealand butter at reduced duty rates to the European Union, and its subsidiary, UK-based NZMP logistics, is an exclusive importer of that butter.

German firm Egenberger, the main complainant in the case, said the EU import rules for butter had encouraged Fonterra's monopoly to develop.