Dairy co-op moves meet stony silence

Industry leaders refuse to speak at farmer forums, PHILIPPA STEVENSON reports.

An attempt to resurrect the dairy mega co-op and inform farmers about the industry is faltering before a wall of company silence.

Dairy Farmers of New Zealand had hoped to circulate a number of industry strategy documents at farmer forums where industry leaders and consultants were to speak.

But the Federated Farmers' section has been turned down by the Dairy Board, New Zealand Dairy Group and a consulting company, and has yet to find out whether it will be given the reports.

Yesterday, chairman Charlie Pedersen said his organisation had been "snookered", but still hoped to reschedule the eight meetings.

"We didn't realise the industry had got to this situation. No one is talking," he said.

For the first time in his experience, the Dairy Board had refused to provide a speaker, Mr Pedersen said. Dairy Group directors Doug Leeder and Jim van der Poel had been willing to speak, but had been refused permission by company chairman Henry van der Heyden.

An international consultancy, which he declined to name, had withdrawn because of its wish to continue working in the industry.

Dairy Board spokesman Neville Martin denied executives had been instructed not to speak at the meetings.

"It is our understanding that one of the purposes of the meetings is to have MergeCo put back on the table. To be involved would be to act contrary to the expressed wish of our shareholders [the companies]," he said.

Dairy Group spokesman Graeme McMillan said the timing of the Dairy Farmers' meetings was the reason directors could not speak.

When merger talks between Dairy Group and Kiwi Dairies collapsed in March, his company had said it would hold its own meetings with shareholders within 90 days. They were now scheduled for the third or fourth week of May.

In the meantime, the company was still working on options to replace the mega co-op plan and directors had nothing new to tell farmers, Mr McMillan said.

"They could only revisit the past and that's not helping anybody."

Mr Leeder said he had planned to make a presentation of the industry's options for going forward, as he had already to Dairy Farmers' executive last week.

It had nothing to do with Dairy Group's plans, he said, but as a director of one company speaking to another company's shareholders "without the expressed permission of the chairman, it is not cricket."

Kiwi chief executive Craig Norgate said Dairy Farmers had not invited anyone from his company to speak at the meetings, and he doubted it would be useful to do so.

Kiwi was working closely with Dairy Group "to make sure nothing gets in the way of the industry strategy," he said.

The mega co-op was the preferred structure, but it was not the only one. Last week's announcement of the Dairy Board merger with Australian company Bonlac Foods was an example of the style of things to come, Mr Norgate said.

There would be no big announcements about the way forward. It would be "action rather than words," he said.

However Mr Pedersen said it was not acceptable for industry leaders to sell a strategy and structure package but fail to deliver the structure.

"Farmers had an expectation they were getting MergeCo.

"It was a failure of the system and people involved [that it did not happen] not a failure of the structure," he said.

Dairy Farmers of NZ still believed that if the industry was not to fragment and destroy value, the manufacturing companies had to merge.

Brian Shaw, of PA Consulting, said he had talks with the farmer organisation about the forums but was concerned they would get "politically messy."

"They said they thought it might get a bit grubby and understood my position, and that's where we left it.

"I'm trying to stay commercially reasonably clean," Mr Shaw said.