Dairy giant hints at price cuts

By PHILIPPA STEVENSON agricultural editor

The Global Dairy Company will go after the hearts and minds of all New Zealanders after winning support from most dairy farmers.

In the relief and euphoria that followed yesterday's shareholder vote for a merger between former rivals New Zealand Dairy Group and Kiwi Dairies, the new company was quick to try for national icon status.

New Zealand Dairy Group farmers gave the merger 85 per cent backing, and in Taranaki there was 83 per cent support from shareholders in Kiwi Cooperative Dairies. The merger required support from 75 per cent of voters in both companies.

The new company, with turnover of $12 billion, will be New Zealand's biggest - twice the size of Telecom - and the world's ninth-largest dairy company.

Chairman John Roadley said GlobalCo intended taking up the challenge of becoming New Zealand's national champion.

The wholly New Zealand-owned company would repatriate profits from the 120 countries in which it operated and reinvest them here, he said. It would give New Zealanders the opportunity to work for one of the world's biggest food companies without having to go to a foreign-owned firm.

Mr Roadley also predicted good things for New Zealanders' pockets, promising that shoppers would see much fiercer competition for their custom at the supermarket after the sale of local market company New Zealand Dairy Foods. GlobalCo will retain the competing Mainland company.

He said buyers now paid the world price for dairy products, but in future local competition would ensure "the best price will be available to all consumers."

Staff layoffs are expected as the new company eliminates jobs duplicated between the two regionally sited manufacturing cooperatives and within the Wellington-based exporting Dairy Board, which will become the new Auckland-based company's marketing arm.

But Mr Roadley said there would be little effect on the Taranaki and Waikato head office hubs of the major companies.

"We plan to grow this business, so there are going to be increased job opportunities ... The real casualties will be in the boardroom, the directors' lounge and the chairmen's offices at Anchor House [Hamilton] and Hawera."

The new company is expected to embark on overseas acquisitions, merging or investing in dairy companies as it builds towards $30 billion turnover in 10 years.

Its plans include targeting foreign markets and meeting head-on the international trend where only one or two key brands reach the most valuable supermarket shelves.

Before yesterday's vote, GlobalCo's backers feared the merger could become a casualty of a vocal opposition which had gained ground as some farmers wearied of in-fighting stalling the appointment of a chief executive, a $1 million-a-year job.

But at a Dairy Group meeting in Matamata - also beamed to Ashburton and Invercargill - and at Kiwi's gathering in Hawera, opposition voices were overwhelmed by those impatient to get on with a plan six years in the making.

Dairy Group chief executive John Spencer said the strength of the vote sent a powerful message of farmer unity to the Government, which plans to introduce the Dairy Industry Restructuring Bill to Parliament today.

The bill, which Agriculture Minister Jim Sutton said would go to a select committee next week, would allow the companies and Dairy Board to merge, and re-regulate the industry "to mitigate any adverse effects of such a large company."

Mr Sutton said submissions would be called for so everyone could have a say. "The dairy industry is New Zealand's largest export industry, and ... changes in the dairy industry affect everyone."

Mr Spencer expected GlobalCo foes to continue their opposition through the select committee.