Dairying 'David' stays clear of merger

By CATHY ARONSON

TATUANUI - The small Waikato cooperative dairy company Tatua has kept its reputation as the David to the Goliaths of the dairy industry by staying clear of the mega-merger.

The company earned the David label this year when it once again returned the largest payout in the country, even though it supplies only 1 per cent of the milk.

The one-factory, four-truck company has only 140 suppliers in a 12km radius, compared with the Dairy Group's hundreds of tankers, 11 plants and 7500 suppliers.

Tatua has kept its head high by swimming against the tide of competition and offering complementary high-value, low-volume specialised products such as energy drinks and health foods. It produces 80 products all year round in a multi-purpose plant in Tatuanui, between Morrinsville and Te Aroha.

Throughout the industry's structural debates the company has kept a promise to its shareholders to increase its commercial independence and avoid the mega-merger.

But although it has refused to be swallowed up by the Think Big strategy, company chairman Alan Frampton has encouraged the merger to end years of uncertainty.

Two-thirds of Tatua's export business is conducted through the Dairy Board and a merger and deregulation would leave it to generate its own marketing network.

Dr Frampton said the company now had to negotiate its position with the board to retain its independence but find mutual benefits.

He said changes to the Dairy Board Act might be imminent after the merger deal and Tatua could gain independence.

"We are taking advantage of being small. The bigger the rest of the industry gets, the more opportunities we have because we are complementary not competitive.

"We will be actively negotiating to protect our position and progress in a complementary way," he said.

The 86-year-old company has built up its independence for the past two years in anticipation of the merger.

Chief executive Mike Matthews said in this year's annual report that the company had prepared its own international marketing and continued to investigate new products.

Tatua had carefully considered its sales and marketing needs, had registered the company name in markets worldwide, and bought new software for export documentation, costing and modelling, he said.

More importantly, the company wants to continue doing what it has done best: invest in staff and resources to create unique products.

Tatua had record volumes of milk during the 1999-2000 year. Its 95.7 million litres was more than 12 per cent up on the previous season, and 4.2 per cent greater than its previous best, in 1995-96. It paid farmers $4.20 a kilogram of milksolids. Dairy Group's payout was $3.75.

Tatua's revenue for the year was $75.7 million, 11.9 per cent up on the previous year's $67.6 million.