Farmers hope to run own merger

By PHILIPPA STEVENSON

Dairy farmer representatives hope to fill the void left by industry leaders' failure to form a mega co-op, with a farmer-led version of the proposal.

After an all-day emergency meeting in Hamilton yesterday, Dairy Farmers of New Zealand delegates voted to resuscitate the MergeCo concept by giving farmers what they never had before - detail.

Organisation chairman Charlie Pedersen condemned "a woeful lack of information to farmers" despite claims that the industry had spent $65 million on reports and advice.

"None of that has been available to farmers," he said. "For example, we have no idea what the single seller is worth but we understand that [evaluation] work has been done."

The group passed a motion endorsing the MergeCo concept, although there was some dissension from a Waikato member. The plan of action would start with a request for the McKinsey report, which canvassed 32 structural options for the industry but recommended the mega co-op as best.

They would also try to obtain the mega co-op business plan, said to have cost more than $3 million but ditched after a key merger between New Zealand Dairy Group and Kiwi Dairies bombed.

Mr Pedersen said the information would be taken by roadshow to farmers and their views reported back to the companies, the Dairy Board and the Government.

The meeting of around 30 provincial representatives also backed a proposal for Dairy Board shares to be reallocated to farmers "in the interests of unity, achieving critical mass and being market-led."

Dairy companies now hold shares on farmers' behalf and the share swap has been mooted as a way to make them a subsidiary of a farmer-controlled board, instead of the reverse.

Vice-chairman Paddy Briscoe said the share swap "was the fallback position, rather than the preferred one. Farmers really want MergeCo but this is a means to achieve a similar outcome."

Mr Pedersen acknowledged the move to action had come late because the organisation had been caught on the hop after company directors unexpectedly failed to deliver MergeCo.

"The failure of that to occur, especially given both Kiwi and Dairy Group said it was the best option, left a void."

Waikato chairman Richard Myers voted against the meetings' two motions. All structural options should be explored rather than just the mega co-op, and there were concerns of industry fragmentation if individual farmers directly held board shares, he said.

Mr Briscoe said there had been more discussion at the meeting than expected, reflecting farmer frustration with the lack of information.

"The theme was that we were making decisions in a vacuum."

He hoped a groundswell of opinion would force the companies to justify their failure to form the mega co-op "and perhaps quantify their plan B. Then we will have some information to make real decisions."

Mr Pedersen said that if his group could not get the information it sought it would continue with the roadshow and "do the best with the information we have."

It would maintain strong links with Agriculture Minister Jim Sutton as it informed and consulted farmers so he could take legislative action he thought justified.

Last night, the minister said he would be "very interested" to see the views that emerged from the farmer discussions.

He said the Government supported dairy industry restructuring if it had farmer support, was in the public interest, and was fair to industry minority groups.