Westland's PayoutThursday, Jul 12, 2001
Westland Coop Dairies announced payout of $5.20 puts a delightful discomfort on the settling down of the GlobalCo merger.
The proponents of ‘small is beautiful’ will be in full ‘I told you so’ mode over the additional 20 cent payout. Unfortunately, to extrapolate to the absurd, regressing the dairy industry back to 40 individual dairy coops marketing through the Dairy Board is not a practical possibility. Even if 20 cents is not far removed from the promoted annual advantage to be gained from the merger.
However, it should also be noted that Westland’s payout is also based on the dairy board’s average payout for the marketing function it performed for all companies this past year. In the future Westland will be managing this marketing role at considerable cost to itself.
But a question that all farmers should be asking of Kiwi and NZDG is what amount of retained earning has been held in the companies for transfer to GlobalCo from this past season’s operations. The merger agreement certainly stated that payouts would be equalised, but the actual size of the total retentions should be of interest to suppliers.
Even more interesting will be the summary of the NZDB retentions, write downs and adjustments that will ensure that there is no incorrect accounting carry forward of matters outstanding from the boards operations in the past.
Suppliers should not let the good payout plus the pressures of the new season blind them to the need to have the pre and post merger financial position fully explained and accounted.
The current crisis in the apple industry originates out of this very real neglect by growers not inspecting the actions of the directors and executives – and they are paying for it..