By PHILIPPA STEVENSON
The do-or-die business plan for the dairy mega co-op is about to start down a tortuous path to anxiously waiting farmers.
Three industry chief executives - the Dairy Board's Warren Larsen, Kiwi Dairies' Craig Norgate and New Zealand Dairy Group's Graeme Milne - have headed a team of
more than 20 working on the pivotal plan through the Christmas holiday and last month.
Today, they are scheduled to deliver to the mega co-op establishment board the five-year forecast of benefits from a merger of up to eight companies and the Dairy Board.
The establishment board will not decide whether to proceed to a mega co-op on the base of the plan; that will be up to farmers. But when they will get to see it is unclear.
Chairman Graham Calvert said last month that farmers would sight the plan in early February, but from the establishment board it would have to pass to individual company boards and it was unclear how long that would take.
In the meantime, the 14,500 dairy industry shareholders have only the vaguest idea what the mega co-op could offer them.
Last May, the Dairy Board claimed it would boost earnings by $300 million a year, turning the industry from a $7 billion one into a $30 billion one in a decade.
Last week, Dairy Board chairman Graham Fraser told farmers at the Dairy Expo in Hamilton that the mega co-op strategy could deliver annual growth of 15 per cent in sales revenue and 15 per cent return on assets.
There would be "not insignificant" direct cost savings from MergeCo, he said, but he indicated that the money upfront would not be enough to sway farmers, whom he implored to keep an eye on growing worldwide competition.
"MergeCo gives us the platform we need to secure our place in that environment. These are the issues you should consider when you are asked to vote on the MergeCo proposal," he said.
If the business plan numbers crunch to farmer satisfaction the mega co-op will still hang on three things: merger negotiations between Kiwi and Dairy Group, which have reached an impasse; a merger vote by farmers, which requires 75 per cent support; and the consent of the Commerce Commission.
If all this is not completed by September 1, enabling legislation will lapse.
