Lloyd Downing. Photo / Derek Flynn
Fonterra milk suppliers angry at Affco's entry into the dairy industry are threatening to stop doing business with the meat processor and send their animals elsewhere for slaughter.
Affco has announced its diversification into the milk sector with the establishment of a wholly owned subsidiary called Dairy Trust
that plans to list on the NZX and begin operating by next season.
But several dairy farmers, also clients of Affco, want to send the message that such a move will only bring down prices.
"Why should I benefit my opposition?" asked Lloyd Downing, who said he would no longer send his culls and bobby calves for processing at Affco - he has about 900 cows.
"There might be competition at the farm gate but our battle's offshore."
Competition in the meat industry had not benefited that sector, with beef and lamb prices faring badly compared with dairy.
"There's competition out there - why aren't they getting more money?
"I've no doubt these people will compete on price. At the end of the day, all you do is ratchet your price down."
The Morrinsville-based dairy farmer, an Affco supplier for about 30 years, said he did not doubt the meat processor would make good money in dairying but questioned how much value such a move would bring to "New Zealand Inc".
"They will compete on price with Fonterra or they will make it so there is some redundant stainless steel that I've already paid for."
Supplying markets that Fonterra did not would only bring down the price received by New Zealand dairy exporters.
"Farmers will need to be careful when they look at this.
"You can't stop people coming into the industry but, personally, there's no way I'm going to benefit my opposition company."
Downing acknowledged some farmers would be pleased at the prospect of competition at the farm gate. "But I'm afraid my vision is further out than that."
Dairy was a "stable and successful industry" because of a "co-ordinated marketing approach" similar to kiwifruit.
Waikato dairy farmer Neil McLean also said his cull calves and bobby calves would no longer go to Affco, which he had supplied for 27 years, after its move into dairy.
"My business is a small message to Affco that I'm not happy," he said.
"If my experience of how the meat industry works carries into the dairy industry, yes, they will be a soft seller."
Affco CEO Sam Lewis said he would not comment other than to say it was "early days" for Dairy Trust.
