By Philippa Stevenson
The dairy industry may be a successful marketer overseas but the new Dairy Board chairman says it missed the main selling point of its mega co-op when making a sales pitch at home.
In August, the Commerce Commission rejected an application for the Dairy Board to amalgamate with up
to nine manufacturing companies after finding the disadvantages of dominance in some local markets outweighed the expected benefits.
In his first major interview since becoming board chairman less than a month ago, Graham Fraser said he was confident a new application could win over the commission.
Mr Fraser said the first application dealt largely with the benefits a merger would produce inside New Zealand and "did not stress strongly enough the business gains that can be had externally."
"On the internal efficiencies they concluded there was not sufficient to be gained to offset the detriments.
"On the nature of that application, we understand why they reached the decision they did."
Mr Fraser said the industry would go back to the commission on the basis of the opportunities to be had internationally. "The big firms around the world, like Parmalat, are moving. We need an integrated business to approach that opportunity. If we are successful there is significant gain to be had there."
The new application would also "look at what they [the commission] would see as the detriments of the business, and I would also say we need to reduce those because they are detriments to the farmer."
Mr Fraser said some disadvantages could be addressed by structuring the mega co-op as one legal entity but made up of identifiable business units with managers responsible for profitability.
