Dire warnings if dairy merger vote fails

By PAULA OLIVER and NZPA

Overseas companies will "cherry-pick" the best of New Zealand's dairy jewels if farmers vote against the GlobalCo mega-merger, local and European sources say.

The editor-in-chief of Grocer Magazine, Clive Beddall, Europe's largest food magazine, said he knew that international dairy players wanted the GlobalCo concept to fall over.

If it did, they would look to take control of New Zealand's best assets as quickly as they could.

"I've always had great respect for the New Zealand dairy industry - they're great marketers - it would be sad to see it cherry-picked by other people," Mr Beddall said: "There must be that danger if they don't go down this (global) route," he said.

His view was backed by Dairy Farmers of New Zealand chairman Charlie Pedersen, who told the Business Herald that he feared total overseas ownership within five years if farmers voted "no."

"The international dairy market would love to see New Zealand split itself up the middle and destroy our ability to extract premium prices on the world market.

"We'd have to split the Dairy Board in two, and we'd end up with something that's a shadow of its former self," Mr Pedersen said.

Dairy farmers will vote on the GlobalCo proposal on Monday. Debate surrounding its pros and cons has become heated over the past week, as leaders battle for support.

Mr Beddall said he could not believe that there was so much debate about the proposal - it was simply the only way to go.

"Can't they see that if they don't go down the co-op route they're in danger of being cherry picked and it can happen pretty quickly? What you might get is a situation where it is cherry picked by the big groups in the United States, in the EU [European Union] and the UK."

Two companies with global ambitions were Dairy Crest, a UK firm, and Scandinavian food giant Arla Foods.

Mr Pedersen said it would take time, but eventually one of the two major dairy companies would become crippled by the other if they were competing. It would look for support, which could only then come from overseas, he said.

"This proposal gives us the chance to continue to own what is one of the most admired dairy businesses in the world.

"It's not only the most admired, but overseas people are incredulous that it's actually owned lock, stock and barrel by farmers. It's not sexy, but it works."