By PHILIPPA STEVENSON
Multinational dairy food firms are likely to establish in New Zealand only if the home-grown business falters, says Professor Bruce Anderson of the United States.
The Cornell University cooperative enterprise programme director said shareholders of the proposed dairy mega cooperative should have little difficulty checking on its performance.
Its formation
would immediately deregulate the industry, allowing other companies to set up here and export New Zealand dairy products.
"They will be allowed but if they don't [set up], that tells you that the [NZ] organisation is probably doing a good job. If they do, that tells you it is not.
"That will be a key indicator [of performance]," Professor Anderson said.
The New Zealand cooperative could also be benchmarked against big Australian company Murray Goulburn and firms in the strengthening dairy industry in South Africa and Argentina.
Cooperative members could express their displeasure at poor performance by "screaming and yelling a lot" and voting directors off the board.
"In co-ops, you usually get a major turnover in directors if the organisation is not going the way members think it should," Professor Anderson said.
A firm believer in agricultural cooperative boards having non-farmer directors, he said studies had shown that the best boards overall had the best nominating systems.
"The job of nominating committees is not to re-nominate the incumbent but also to aggressively go out and find the best candidate for the job."
He and colleagues had devised a director evaluation system, used by the largest cooperative in the US, Farmland Industries, for the past five years.
In the first year of using the system, each director evaluated all other directors with the results given only to each individual.
It gave directors an opportunity to come up to speed if they were deemed to be underperformers.
As directors came up for re-election, they would be re-evaluated and given a chance to comment on the assessments before information was passed to the nominating committees.
A board without outside directors was "like a ship with everybody on one side of it. It lists badly," Professor Anderson said.
"Outside directors bring objectivity, expertise and typically, discipline to board discussions. All the farmer directors have a conflict of interest, back home on the farm with the people that elected them."
