Dairy future at heart of election

By Philippa Stevenson

Who owns and controls the restructured dairy industry is the central issue in the coming New Zealand Dairy Group ward election pitting challenger Jim van der Poel, a Waikato farmer, against incumbent John Storey, a Dairy Group director and chairman of the Dairy Board.

Mr van der Poel said he favoured the merging of most dairy companies and their Dairy Board marketing arm into a mega-cooperative, "but not at any cost."

The board had predicted that the restructuring could turn the $7 billion industry into a $40 billion one in 10 years with the consumer products part of the industry outside the cooperative structure.

Plans for creating a mega-cooperative are still being developed. But the outline proposed so far would see farmers being given shares in the consumer products business.

It would trade abroad under the Anchor and other brands owned or controlled by the Dairy Board. It would sell a wide range of products, which accounted for some $1.8 billion of revenue for the Dairy Board in the last financial year.

As a shareholder-owned company, the consumer products business could take in external investment. It is seen as the part of the industry with the best growth prospects. The rest of the industry would remain cooperative-owned. It would process milk and sell food ingredients under the New Zealand Milk Products brand.

Mr van der Poel said he would like to see farmers retain ownership of the consumer business, or the mega-cooperative as its cornerstone investor.

"Once we have need for outside investment it is only a matter of time before we lose control of the business. I am concerned that we will relegate all future New Zealand farmers to being commodity price takers." He said the industry would not necessarily generate the projected returns.

"To get to a $30 billion business you have to have a 15 per cent compounding growth for 10 years. You can't have any slip-ups in between.

"If we come under pressure, the need will come on for outside investment. That's why structures we set up are important," Mr van der Poel said.

Mr Storey said he was a staunch defender of the cooperative structure evidenced by the campaign which concluded in 1996, to ensure on behalf of farmers dairy company ownership of the Dairy Board. He hoped farmers would continue to own and finance the industry but it was sensible to provide the opportunity for external investment.