Dairying is big and dirty game

Dumped Dairy Board chairman John Storey choked back tears to make his final address to the farmers he had served as a director for 20 years.

The 600-strong audience at this week's 80th annual meeting of New Zealand Dairy Group - the company he also chaired for six years - were attentive and gave him a standing ovation.

For many, though, it was a dutiful show of respect for his work only. The uncharismatic Mr Storey never gained popularity.

Afterwards, in the rumble of conversation over a lunch of chicken legs, pizza and cake, one phrase was repeated about the departed industry leader: "He who lives by the sword, dies by the sword."

Welcome to the brutal world of dairy industry politics.

The sudden death of Mr Storey's high-flying career at the hands of just 480 farmer electors illustrates what life is like in the land of milk. It is not sweet.

In the curdled swill of the dairy farming business, as another lunchgoer put it: "Friends come and go, but enemies accumulate."

It is big business. The Dairy Board alone is New Zealand's largest company with an annual turnover last year of $7.9 billion, contributing $4.8 billion to New Zealand's current account.

Export earnings represent 23 per cent of New Zealand's total export revenue and 16 per cent of current receipts.

It is also big politics. The industry is riddled with inter-company rivalry, shifting and destabilising power plays and personal vendettas.

Tellingly, one of the first to call Mr Storey to offer a sympathetic word was another dumped politician, former Prime Minister Jim Bolger.

Mr Storey has been just one of the figureheads of controversial moves to establish a huge company by removing the Dairy Board's export monopoly and grafting the marketing arm on to around eight of the manufacturing companies.

But among those industry leaders, Mr Storey alone was up for election.

Farmers frustrated at not being able to air their concerns at the sudden turnaround in industry direction found a voice at the ballot box.

For others outside the electorate, a chance to remove the gruff, tough John Storey was too good to miss.

His successful challenger, popular, award-winning farmer Jim van der Poel, accused Mr Storey of "forcing major industry changes through without adequate consultation."

Other factors in the Dairy Group Te Awamutu ward also counted against Mr Storey.

Despite his protestations to the contrary, he had lost contact with his electorate. Some recount that during the election they heard from him for the first time in 20 years.

Significantly, 60-year-old Mr Storey offended at least one woman - partner in a big farm enterprise - by phoning and asking for the "man of the house."

He was viewed as throwing his weight around when, at his request, industry consultants McKinsey and Co supplied a letter to refute claims being made by Mr van der Poel that the mega-merger could lower payouts to farmers.

Mr van der Poel, aged 43, acknowledged the sensitivity of his timing in industry terms but was encouraged by the strength of his backing.

"If I didn't have the support - particularly of senior industry people - I would not have stood."

His backing included former Dairy Board deputy chairman Doug Bull, and the man Mr Storey had ousted as Dairy Board chairman, Sir Dryden Spring.

Sir Dryden, who unlike Mr Storey was a charismatic and popular leader, had "mana," said Mr van der Poel.

"I don't think endorsements come any better than that."

Sir Dryden, who did not respond to requests for comment, stood down as board chairman before his final term was finished last year. He believed in retention of the single seller legislation, and farmer control of the industry.

Mr Bull lambasted industry leaders for doing an about-face. "I take exception to people leading the industry now saying farmers had been denied this for too long, when I know damn well who the guys were who actually said it was not the way to go."

Earlier this decade, when Mr Storey stepped into real prominence, many of today's protagonists were allies.

When farmers say that Mr Storey died by the sword he once wielded, they remember mostly the huge controversy of 1992 - another dumping - the sensational sacking of the popular Dairy Group chief executive of the time, Mac Calvert.

It was another period when politics came out into the open.

In 1992, brothers Graham and Mac Calvert each headed a Dairy Group wing. Graham, the farmer who now as leader of the dairy industry establishment board is leading the mega co-op charge, was the Hamilton milk processor's chairman. Younger brother Mac had gone up through the factory side and come out as chief executive.

They were stunned when, in June 1992, while both were overseas, Mac was sacked. Graham stood down as chairman, and the Serious Fraud Office began investigations.

Mr Storey stepped up from deputy to company chairman, and for six months also filled the chief executive's chair.

Rumours of backhanders and ripoffs took flight. With little information, farmers became so frustrated a march was proposed down Hamilton's main street.

Around the same time, also while he was overseas, Graeme Wilson, the seven-year chairman of the Alpine company, and Mac's close friend, was also dumped by his board to the shock of suppliers. (Alpine later merged with Southland Dairy to become South Island Dairy Co which this year merged with Dairy Group.)

Mr Storey indicated he would explain the head office ructions at the September 1992 annual meeting. Reporters were barred, fuelling farmer expectation that they would get the real oil.

Double the expected number turned up, delaying the meeting start, but not one word was volunteered by Mr Storey on the "Calvert affair."

Farmers had a say which Mr Storey would have done well to heed. They dumped four directors.

The Serious Fraud Office did not prosecute Mac who later revealed the investigation was into the use of company funds to "facilitate issues to be dealt with."

Dairy Workers Union secretary Ray Potroz later said that a payment of $8000 was among "reasonable amounts of money which changed hands" between the company and low-level union officials.

The sacked Graeme Wilson of Alpine, then president of the Dairy Industry Employers Association, agreed that from time to time Dairy Group funds were used to make payments to union officials.

Mac maintained he was the victim of a coup.

He was a member of the Business Roundtable and an acknowledged critic of producer boards and single sellers.

He said the giant Dairy Group could one day break away from the industry and go it alone. He and Mr Wilson had also discussed an inter-island merger.

In those pre-mega co-op days such views were a major threat.

More recently, Mr Storey has championed a corporate structure for the industry, for which he has apparently paid the ultimate price - exile to the wilderness.

Mr Storey's ousting leaves a big question. What will those who plotted to get rid of him do now?

Commerce Commission decisions have allowed the mega merger game to run on. What will such a fractious industry do with the extra time?

Mr Storey will no doubt join the long list of sideline plotters.

And like those before him who have suffered the slings and arrows of outrageous dairy industry fortune, he will eventually find some comfort.

Possibly in the words he used himself at the departure of the Calvert brothers in 1992.

"This company isn't any one person. This company is built around a team."

And what a team.