By PHILIPPA STEVENSON
Dairy industry leaders have abandoned the direct approach to a mega co-op, but may yet take a roundabout route.
Agriculture Minister Jim Sutton, who met four industry leaders yesterday, said he was assured they were "still in reformist mood" and would not take a breather from industry restructuring.
Dairy
Board chairman Graham Fraser and the heads of New Zealand Dairy Group, Kiwi Dairies and Marlborough Cheese - Henry Van Der Heyden, John Young and Ron Mackle - told the minister they were exploring alternative structural options.
Eventually that could lead back to the mega co-op plan, Mr Sutton said.
The chairmen's demeanour suggested "someone had just removed the shotgun from a shotgun wedding. The parties involved can now get back to a more normal courtship," he said.
The minister said the leaders were still committed to the growth strategy of the McKinsey report, which identified a mega co-op integrating most manufacturing companies and the marketing Dairy Board as the industry's best option.
The failure of Dairy Group and Kiwi to agree on a key merger two weeks ago killed the plan.
The industry leaders gave no hint of new plans, though they remained committed to a strategy of acquisitions and building joint venture partnerships already started by the Dairy Board, Mr Sutton said.
"I'm confident that the industry now has a clearer view of where it wants to go, why, and what it needs to do to get there."
Mr Sutton said he believed more strongly than ever that industry reform would be necessary in the near future.
"I think they need to build a more modern corporate culture within the industry that will facilitate necessary restructuring."
The minister said he confirmed to the leaders that the previous government's threat of imposed industry deregulation was withdrawn, and his Government would draw up a new deregulating legislation "if and when required."
He was heartened by the chairmen's proposals to improve communication within the industry, which he understood to imply "that some failure in communication or some failure to build an appropriate culture between the companies and within the industry contributed to the failure of the mega merger proposal."
The industry leaders declined to comment after the meeting
