Questions flow over failure to merge

By PHILIPPA STEVENSON

Between the lines

The top echelon of the dairy industry provided powerful symbolism when it flew out of the country at the weekend.

Dairy Board directors, made up of manufacturing companies' senior board members and chief executives, literally abandoned New Zealand.

The same could be said of their decision on Friday to dump the mega co-op proposal for the want of a merger between Kiwi Dairies and New Zealand Dairy Group.

The deal that would have precipitated the integration of milk processing and marketing - establishing the normal commercial model of market demand driving manufacturing - was more than just in the interests of dairy farmers.

It was in the interest of all New Zealand.

The dairy industry is New Zealand's biggest industry, providing nearly 20 per cent of the country's exports, underpinning the economy and buttressing the wellbeing of towns and cities even to the size of Auckland.

This national interest has rested in the hands of a few people who have shown themselves not up to the task.

That they are not going to be around to take the criticism that will flow their way in the days immediately following their decision is indicative of the arrogance and ignorance that led to it in the first place.

The Dairy Board meeting they are attending in Singapore was, no doubt, scheduled some time ago.

Regardless, their farmer shareholders are fuming, the rest of the community should be, and the Government could at least be asking them some hard questions.

The Dairy Board directors should be available to explain themselves.

Of course, it was not as Dairy Board directors that they made the decision to dump the mega co-op. They had their company hats on then.

And therein lies much of the problem.

The same people who run the competing companies run the marketing board that is supposed to act in everyone's best interest. They were also the same people who tried to negotiate the merger.

The mega co-op was the solution to what one INSIDER describes as "an incestuous relationship that in the commercial world would be scorned."

Yet, he says, the farming community just shrugs and accepts the situation as part and parcel of being a co-operative industry. They shouldn't.

Farmers have most to gain from the united industry that the mega co-op would have brought. Their bargaining power on the world stage would have been enhanced, and as the commodity price for their milk drops they could have further built up the side of the business where returns are rising - the processing and marketing sector But they have been ill-served by their leaders who, for their own purposes, have failed to explain the threats and the opportunities ahead.

It may be better if the tickets to Singapore are one-way.