Seven into one - the country's biggest job

By Scott MacLeod

HAMILTON - Graham Calvert is working on a monumental project - pulling together seven rival companies in the nation's biggest merger.

Mr Calvert, aged 65, is chairman of the establishment committee aiming to merge seven of the nation's nine dairy companies with the Dairy Board.

If successful, the merger will create the country's largest company by September next year.

But four big hurdles are yet to be cleared - a law change, Commerce Commission approval, winning farmer support ... and finding how to make the companies be nice to each other.

Perhaps the strongest friction is between the two biggest companies, the NZ Dairy Group and Kiwi Co-operative Dairies.

Their chairmen, John Storey and John Young, stepped down from the committee last week to "lessen the likelihood of sectorial interests."

Mr Storey says too little thought went into setting up the committee, and confusion existed over whether it had merely the short-term role of bringing about the merger or whether it was also, in effect, the co-op's first operating board.

Mr Young says Kiwi can work with the Dairy Group.

"Certainly there is a common focus." he said. "Both companies see it is in their long-term interest."

Mr Calvert believes much of the problem stems from cultural differences between companies based in different parts of the country.

"An Aucklander thinks differently to a Taranaki farmer," he says. "Bringing all these cultures together is a huge thing."

Mr Calvert has been spending up to four days a week in Wellington working with the Government on law changes needed to allow the merger.

Much work has also been done with the Commerce Commission, which must decide whether companies which control 95 per cent of the domestic market should be allowed to stop competing with each other. A decision is expected in late October.

The plan at this stage is to restrict the co-op's local market share to 40 per cent, allowing other local companies to fill the gap. The co-op will focus most of its energy overseas, and will aim to quadruple its annual turnover to $30 billion within 10 years.

Mr Calvert says figures in a recent study show why the co-op is needed. Milk prices have been dropping for 20 years, and in five years will be "very unattractive."

Beating the slide means adding value to the goods. A big co-op can force its way across new borders with strong marketing and branding.

But thousands of shareholder farmers must agree if the co-op is to work. At least three proposals are being looked at to ensure the co-op can survive shareholder dissent.

"We are spending a lot of time working on that," says Mr Calvert. "You do want to be fair, but we must keep the industry viable."

Mr Calvert and other committee members have met hundreds of farmers to push the benefits.

Some of them feel the merger is taking place too quickly, but Mr Calvert rejects that notion.

"We are talking 20 to 22 months. That may seem quick to some farmers, but it's not in the world of big business."

And when it's all over, Mr Calvert has further plans. He is going to retire and go fishing.