By Philippa Stevenson
agricultural editor
Directors of the three dairy companies key to the formation of a mega co-op gather this weekend for what is being termed a "high-noon" summit.
Yesterday, industry sources described the two-day Auckland meeting as "make or break" for the single company plan, although the chairman of the mega
co-op establishment committee, Graham Calvert, was keen to downplay its critical nature.
Mr Calvert said most directors from the Dairy Group, Kiwi and Northland companies were expected at the meeting to discuss the key issue of the share structure of the proposed co-op.
"It's just one of 48 issues. I don't want it getting a life of its own."
The Commerce Commission raised 48 questions in its draft determination turning down the industry's one-company plan because it could cause dominance in the markets for farm and retail milk.
However, the share structure has become a major sticking point between the two largest companies whose merger is needed to kick start the plan.
Kiwi wants farmers to have one share fairly reflecting the value of their off-farm investment.
Dairy Group wants two shares, fearing that one, high value share would cause farmers to exit the industry and drain its capital. It favours one share to give farmers a return on the export quota markets, and a second share in the added value, consumer products business. Returns from commodity products would be paid out in the payment for milk supply.
Presently, farmers have shares in their company with a nominal value, and all returns are bundled into the milk payout.
Kiwi is concerned that farmers will lose control of their industry if, as mooted by the establishment committee, shares in the consumer business eventually become available to external investors.
