Dialogue: No more room for mistakes

Act MP PENNY WEBSTER has concerns about the planned $12b dairy merger.

As a dairy farmer, I have been through several mergers in the past 25 years. Each time industry leaders make impressive promises. When these promises go undelivered, we are told that next time things will be different.

Now the dairy industry has one last chance. The Global Dairy Company merger, we are told, is the Big One.

We've heard the old promises again, but what we haven't heard is any reassurance that the result will be any different this time around.

Under the $12 billion company merger, Kiwi Dairies and the Dairy Group will become one giant: GlobalCo.

Along with the great majority of farmers, I support the deregulation of our industry. However, the proposal that the Government is rubber-stamping is not a true de-regulation.

It is a Clayton's version that will not protect the interests of either farmers or consumers. That is frightening.

Dairy farmers have not received enough information about this proposal.

What we have been given is propaganda from those in the industry pushing for GlobalCo.

The business plan we have been provided with is thin and basically conveys the message that dairy industry leaders will stop repeating the mistakes made in the past. We've heard that before.

While those mistakes show we need deregulation, they are not evidence for the creation of a monopoly.

With little information, farmers have had to rely on advice from our industry leaders. These people have successfully marginalised those who voice opposition to their ideas.

In doing so, they have pulled the wool over farmers' eyes. Now, they have done the same to the Government.

The merger is to go ahead without Commerce Commission scrutiny, so we will have no independent assessment. With this merger affecting so many livelihoods, we should stop for some calm reflection.

What message has the Government sent by allowing this country's biggest business to form itself into a virtual monopoly without proper scrutiny?

I fear that dairy industry leaders know that their proposal wouldn't stand up to independent analysis. If it were truly sound, then this merger would have breezed through the Government watchdog.

If the people who run GlobalCo get the strategy wrong, they could mess up the entire industry. That would be disastrous for all New Zealanders.

Getting a competitive price is vital for dairy farmers.

Agriculture Minister Jim Sutton argues that farmers will still be able to negotiate for the best price at the farmgate.

This is questionable. Ninety-five per cent of the industry will be in one set of hands, so farmers will have no guarantee they can obtain competitive prices. The price will be set, and most farmers won't have any serious options for a better deal.

Another concern stemming from this merger concerns potential overseas expansion. Australia, our neighbour, is an obvious place for us to form partnerships. However, how will they view a New Zealand monopoly's attempts at entering their marketplace?

Arguably, Kiwi Dairies and the Dairy Group could be more successful at forming liaisons on their own.

Returns that farmers receive will reflect how successfully this monopoly sells overseas. Internal competition will have effectively ended, so if GlobalCo fails on foreign soil, it will have little choice but to pay NZ farmers less, to compensate for the loss. At the same time, the company would have to raise milk prices in local supermarkets.

Dairying, which provides 20 per cent of our exports, is too important to be driven by internal politicking. It is time for rational debate where every voice is heard.