Former dairy head pushes mega merger

By PHILIPPA STEVENSON

Delays in forming a dairy mega co-op has prompted former Dairy Board chairman Sir James Graham to speak on industry affairs for the first time since his retirement 10 years ago.

The esteemed industry leader said he broke the silence he had kept since 1989 at the request of Bay of Plenty farmer Catherine Bull, spokeswoman for a new lobby group, Farmers for Control, which favours the mega co-op.

"The projected savings as a result of a single company being formed need to be attained as quickly as possible," said Sir James.

Dairy farmers had every right to feel concerned and frustrated over the continual delays in finalising a single company embracing marketing and manufacturing.

"We have seen personality conflicts, problems of share standards, and inter-company rivalry for control of the industry. All of which has led to the lack of trust between the two larger companies, New Zealand Dairy Group and Kiwi."

He said the result was poor negotiations with the Government over deregulation, "and an almost complete lack of concentration on the realisation of improved returns from the marketing side of our business."

Farmers were entitled to better than navel-gazing from their leaders, Sir James said.

"One of the major stumbling blocks in arriving at a mega co-op is certainly the valuations that Kiwi and New Zealand Dairy Group have placed on their individual companies. Frankly, as a farmer, whatever the result, it is of less importance to me than the damage of not achieving a unified industry which concentrates on its marketing realisations, its cost reductions, and as a result an improved return to all its shareholders.

Sir James said the question of whether the new Government required industry deregulation should be pursued.

"If so, and if it is in the public good category, new terms need to be negotiated. At the very least the Government should assure the Commerce Commission that it is in the public interest for a merger of the two companies to occur.

"An extension of time before deregulation occurs needs to be negotiated. A mechanism by which Kiwi and Dairy Group retain their local market companies and continue to provide competition within New Zealand needs to be explored.

"The ownership of quota rights currently managed jointly by Government and industry needs to be allocated to the merged companies and Government jointly for the foreseeable future."

Sir James said it was time to get on with the decision.