Mega co-op idea just an echo from days gone by

By PHILIPPA STEVENSON

A dairy industry eager for progress on the mega co-op can look to one of its erstwhile executives for lessons in patience: Col Keen has been waiting 42 years.

The enduring proponent of an integrated industry last publicly championed it in 1986, just after he had retired as managing director of the Northland Dairy Company. The first was in 1958.

Fourteen years ago, in a stunningly prophetic address to the New Zealand Society of Dairy Technology, Mr Keen suggested that the Dairy Board should be confined to policy-making functions and "to this should be added a trading arm that will control the total manufacturing and marketing activities of the industry.

"I believe that this will be best achieved by the formation of a single operational company from a consolidation of all the dairy companies in New Zealand, to which will be welded the Dairy Board's marketing arm."

Mr Keen, whose 38 years as a company executive covered the amalgamation of dozens of small Northland dairy companies into just one, went on to foreshadow concepts that have become common in the past year, having gained ground five years ago with the big push for a mega co-op by four now defunct companies - Bay Milk, Tui, Alpine and, perhaps thanks in part to his legacy, Northland.

In 1986, Mr Keen said of integration: "The most important benefit would be the close relationship between market and production and the ability to direct and control production as the market determined."

He advocated that the marketing arm, from a central site, would strategically place branches and subsidiaries around the globe.

Flexible manufacturing operations would be able to take advantage of markets as they developed, with comparative factories competing against each other to replace "the inter-company stimulus as we know it today."

"Gone will be the complex differential schemes that are at present operating between companies, and the mental and financial gymnastics that endeavour to obtain a satisfactory product mix."

He concluded that "it is only after achievement of this status that our industry may be classed as a true multinational and take its place along with the world's giants in dairy produce trading."

Last week, the 76-year-old, who lives in Whangarei, recalled the first time he advocated a single company. It was in two articles he wrote in 1958 and which appeared anonymously in the New Zealand Farmer.

"The Dairy Board found out pretty quickly [who had written them]. I had a call from Fred Hayward, who was chairman of the New Zealand Dairy Company at the time. He had found out who it was. Eventually I was hauled up before them in Wellington to 'please explain'."

In 1958, there were about 400 fiercely parochial and competitive dairy companies, Mr Keen said. "My argument has always been that there is no sense in competing against yourselves. The place to compete was the marketplace, and I felt very strongly about that. I really indicated that they should form a national council of the dairy industry, which would be the Dairy Board, and it control all the companies ... welded together."

He was treated well by the Dairy Board chairman of the time, Sir Andrew Linton, but "I wasn't exactly welcome with some of the Dairy Board people."

Mr Keen continued to promote his idea, especially among dairy company secretaries whose association he chaired. "Some would laugh at me, and others would sort of realise that something like that had to happen," he recalled.

Does he feel like a prophet now, as his idea looks close to being realised 42 years after he first mooted it?

"Not so much a prophet. I just felt it was the only objective the industry should undertake, to be quite honest."

* The chairman of the Dairy Industry Establishment Board, Graham Calvert, expects the mega co-op business plan to go to dairy companies later this month.