Dairy goat farmers fight for status quo

By Philippa Stevenson

The dairy goat industry fears it will lose hard-won profitability if it is forced to deregulate along with its giant cousin.

The tiny sector, which reckons its successful mini-co-op could be a model for the proposed dairy mega-co-op, has been caught up in plans to do away with the monopoly-exporting Dairy Board.

It says its export earnings, set to top $30 million this year, are at stake and has made a plea to the Government to be freed from the deregulation of the dairy cow industry.

Dairy Goat Cooperative chairman Russ Moroney said the industry had already tried to operate without the single-seller legislation and "failed miserably."

The export of products from the largely Waikato-based milking goat industry came under the Dairy Board Act in 1984 after disastrous marketing decisions by competing co-operatives had brought it to its knees.

In a submission last week to the parliamentary select committee considering the Dairy Industry Restructuring Bill, Mr Moroney asked for the industry to have its own single-seller statute.

"When the industry was formed in the late 1970s, the first cooperative established good returns from its key market. Buoyed on by this success ... the industry underwent rapid expansion, and there were soon eight co-operatives operating without any export control," he said.

"This quickly led to over-production and destruction of the key market through a price war and poor quality. The result was that, in the early 1980s, most of the 240 dairy goat farmers in New Zealand went out of business."

Since exports had been controlled under the Dairy Board Act, the industry had become market-led and developed a range of branded niche consumer products.

"None of our production leaves New Zealand as a commodity. We have increased our overseas earnings from $1 million in the 1980s to $22 million last year, and will exceed $30 million this year," Mr Moroney said.

But the industry was still dependent on its key market, Taiwan, and market diversification was in its early stages.

It did not have the huge number of subsidiary companies operating in most countries like the cow industry did, nor did it have preferential entry to lucrative markets in Europe, the US or Japan.

"I believe that the removal of the single-seller status from the dairy goat industry could again see the industry collapse, with the resultant loss of the current and potential export earnings," Mr Moroney said.

In a separate letter to the members of the select committee, the dairy goat cooperative claimed to have "a cohesive, focused, dynamic industry divorced from the commodity cycle."

Chief executive Dave Stanley said the 82-member mini-co-op was the sort of structure the cow dairy industry was heading to with its plans for a mega-cooperative of most of the nine dairy companies and the Dairy Board. "We control the level of milk supplied and what it gets made into," he said.

Most of the goat co-op's 82 farmer suppliers were in the Waikato, with smaller numbers in Northland and Taranaki.

Their milk was processed at the Anchor Waitoa factory, mostly into infant nutritional products.

The bulk of exports went to Taiwan, with smaller amounts sold domestically, in Australia and Europe.

The industry had created a new market segment and was now the leading player.