Mega co-op will safeguard gains: Dairy Board leader

By PHILIPPA STEVENSON

The dairy industry's hard-won $8 billion value will rapidly erode if it fails to form a mega co-op, says Dairy Board chief Warren Larsen.

"I see now a window of opportunity [to create the co-op] that might not be there in eight or nine months," he told farmers at a meeting in Hamilton.

If the integration of marketing and manufacturing did not occur, the big cooperatives, Kiwi Dairies and New Zealand Dairy Group, would "continue to slug it out" on a destructive course that would quickly cost more very good staff, he said.

The chief executive of nine years, who himself will resign in May, warned that the industry had already lost some key people. More delays in creating the mega co-op would mean the "value destruction curve will accelerate."

Board chairman Graham Fraser endorsed Mr Larsen's comments and said that while some good work on the mega co-op had gone down the drain, the industry had lost little when enabling legislation lapsed on September 1.

"The Government stands ready to assist us with whatever we want to do but we've got to decide what we want to do."

The Government did not have a preconception of how the industry should be structured, and advantage should be taken of that openness, Mr Fraser said.

The pair's blunt messages, which were welcomed by the 200-strong audience, will be spread nationwide in a series of meetings that follow the board's annual meeting last month.

They spoke in Rotorua last night and will address Auckland farmers in Pukekohe on Tuesday.

It has become increasingly unusual for the board chairman and chief executive to talk directly to farmers because the manufacturing cooperatives consider it their right and responsibility to inform shareholders on industry matters.

But emboldened by his imminent departure, Mr Larsen has thrown off the muzzle.

He underscored the industry's gains - and what farmers stand to lose - by reviewing its performance over the nine years he has been at the helm.

Gross revenue has risen 51 per cent to $7.7 billion, export sales volume have increased 56 per cent, international market share has grown from 19 per cent to 31 per cent, shareholder payments have risen 60 per cent to $4.5 billion, milk bought from farmers has increased 46 per cent and working capital as a percentage of revenue has dropped from 38 per cent to 32 per cent.

Mr Larsen urged farmers to maintain their unity, concentrate on the commercial rather than the political, "and above all else, continue to control your own destiny for as long as you possibly can."