Dairy firms running out of gumboots

BY PHILIPPA STEVENSON

If a week is a long time in politics then a lot of politics can also make a week seem a very long time.

Never mind the general election; the dairy industry alone made last week like a hard slog through gumboot-topping effluent Kiwi and Dairy Group again spent time - in public anyway - jockeying for their constituents' favour. With a deadline for the mega co-op looming in just seven months, farmers can only hope that behind closed doors some progress on a merger is actually being made.

However, there are indications in dairyland that farmers are getting what they voted for.

Dairy Farmers of NZ chairman Charlie Pedersen, consulting nationwide, found that in the Bay of Plenty, Dairy Group suppliers were overwhelmingly prepared to give to get a merger with Kiwi.

He was in the heart of Doug Leeder territory - the former Dairy Group chairman thought dumped by his board for taking just that line. Tellingly, in the Waikato, Mr Pedersen found farmers less accommodating.

Down country, a Kiwi supplier, pleased his company's merger with Northland would strengthened its negotiating hand, believed both big companies had been holding things up and instead needed to look at the industry as a whole.

What was there to argue about, he wondered, when for years both companies' payouts had been within one cent of each other? If either was a hot shot it would have showed up by now, he reckoned.

Many South Island farmers feel they have done their bit. The amalgamation of Southland and Alpine into South Island Dairy Co, followed by the merger with Dairy Group, had removed any possibility of the two promising regions being split between the big two companies and allowing them to remain in competition.

According to speakers at an agribusiness conference early last week, all the manoeuvring is symptomatic of changes in agriculture occurring worldwide.

Neville Spry, director of Australian investment adviser Gresham Partners, said that success in farming had not translated into successful results in agribusiness companies.

In helping different businesses to change "in all cases we have created agribusiness controlled by growers or suppliers." There were different ways to achieve that while also welcoming in other investors, he said.

He also noted that as soon as outsiders showed interest, growers were often willing to unlock more funds of their own.

Former Goodman Fielder agribusiness manager Peter Flottman sounded a warning about parochialism and highlighted the need to develop relationships along the supply chain from farm to fork.

"Agribusiness in the future will become more 'chain versus chain' than a commodity-based environment and country versus country," he said.

That future could be a profitable place.

Too many more weeks like the last one, though, and one of New Zealand's best chances could be lost in that effluent.