Dairy walkabout

By PHILIPPA STEVENSON

agricultural editor

Fresh from abandoning their mega co-op plans, the dairy industry's top leaders have left the country to attend a Dairy Board meeting in Singapore.

Former warring factions among the Dairy Group and Kiwi Dairies directors have put on their Dairy Board hats and will spend most of the week looking at operations in Southeast Asia.

It is the second time the directors of the global marketer have met overseas and it is likely that a new item on the agenda will be the industry's next best way forward after Friday's trashing of the option it considered best - integration of manufacturing and marketing in a mega co-op.

In Australia on Friday, Agriculture Minister Jim Sutton told Reuters that Kiwi was now likely to seek a partner from Australia or elsewhere to gain the bulk it needed to become a global competitor in its own right.

"And I suspect that they will want an offshore partner to give them scale to take on Dairy Group and to take on the world."

Mr Sutton said transtasman amalgamations were logical. "We're both going to need scale to leverage off if we are to tackle the rest of the world. The threats we face are common threats."

Immediately after the plug had been pulled on the mega co-op, Kiwi chief executive Craig Norgate indicated that his company might look at welding more than just its own operation into any Australian deal.

Integration had always been about joining Australia to market combined milk, he said.

"If we don't have all our collective milk working together, then we are simply not going to foot it with those [producers] who are subsidised."

He was tightlipped about the detail of Kiwi's option known as Plan B. The focus would be on getting the business moving. "We're quite anxious not to destroy value but enhance value."

The head of the defunct mega co-op establishment board, Graham Calvert, said: "The next solution will crystallise in the next 60 days.

"I am absolutely determined that the industry will not go backwards."

Mr Calvert, aged 65, said the failed mega co-op could have been his industry swan-song.

He would provide "maximum assistance" to the new generation of industry leaders "but on the other hand it looks close to a time when going fishing doesn't look too bad either."

Dairy Group chief executive Graeme Milne, who remains committed to the mega co-op idea, said the industry reverted to the status quo. "But there is always another way to skin the cat."

Dairy Group's fallback plan was dubbed Operation Eagle and chairman Henry Van Der Heyden said he would hold meetings with suppliers within the next 90 days to discuss "where we propose to go from here."

Dairy Board chairman Graham Fraser called for level heads and quiet determination after the breakdown of the merger, which had promised cost savings of $306 million a year.