Dairy sector a mess, says Fed Farmers

By PHILIPPA STEVENSON agricultural editor

Dairy industry leaders yet to offer an alternative to the failed mega co-op proposal are making a mess of New Zealand's top export industry, says the dairy section of Federated Farmers. The chairman of Dairy Farmers of New Zealand, Charlie Pedersen, said last week's botched announcement of the resignation of Dairy Board chief executive Warren Larsen signalled deeper problems.

"The ham-fisted handling of this announcement is a small glimpse of the balls-up some elected industry leaders are making of New Zealand's flagship export industry," he said.

Industry leaks to the news media forced the board to confirm Mr Larsen's resignation.

The Business Herald understands that the premature notification has sparked concerns that his departure - scheduled for next May - will jeopardise proposed joint ventures with overseas companies.

Two deals are under way - one with Bonlac in Australia, another with Dairy Farmers of America - and Mr Larsen had promised more before the year is out.

Mr Pedersen said he was loath to describe the forceful Mr Larsen as a lame duck "but he can't but have less ability to convince people of a long-term strategy when they know he is not going to be there for that strategy to be implemented."

The giant rival manufacturing co-operatives, New Zealand Dairy Group and Kiwi Dairies, have been discussing alternatives to their integration with the exporting board in the mega co-op since the proposal collapsed in March.

A substitute industry structure has yet to be identified, and the company leaders had also "dismally failed" to take up a Government offer to extend the September 1 deadline for the mega co-op enabling legislation, the Dairy Amendment Bill, Mr Pedersen said.

He said the exclusion of Dairy Board executives from the discussions on industry structure was a "dreadful waste of resources."

"The companies are considering options, but they have to be tenable to their suppliers and I am still convinced that a significant majority of the suppliers would rather see them do something together than apart."

Now, during a time of good payout, was the time to position the industry for the next cyclical downturn, Mr Pedersen said.

"At the moment we are gazing inward instead of outward. It's a dreadful waste of time and opportunity."

Mr Pedersen said frustration was building among farmers and hopes were fading that the "new blood" of Kiwi chairman Greg Gent and Dairy Group chairman Henry Van Der Heyden were going to deliver.

"Mergeco failed, Dairy Group and Kiwi got into talks and said they were coming out with another option.

"Well where is it? Let's get real, guys.

"Is there one and is it going to deliver us $300 million [a year extra]?"

Mr Gent is in Brazil and unavailable for comment.