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Cooperative Farming Industries Loosing their Way

Greetings Readers

Farmer cooperatives have been part of the structure of New Zealand farming since early times. Many have been formed; most have fallen by the wayside. In most cases their purpose has been overtaken by better alternatives but in many instances they died through neglect.

At a time when the GlobalCo meanderings, with not much begetting, are moving into a slow motion dance and the annualized PPCS mating ritual with Richmond shows signs of turning prickly it seems that business sense has departed our industry leaders.

Have cooperatives outlived their usefulness? Have the demands for performance become unrealistic or even unattainable? Do the director and managers know beyond personal need for status and good salaries why the coop exists?

The basic theory for cooperative formation was to gain market power for the many individual farmers by banding together to negotiate stable and profitable markets. That need still exists for all forms of farm production. But regrettably cooperation today seems to be unable to deliver that success.

Corporate concentration in agricultural markets makes it more difficult for farmers and their cooperatives to compete and if these surviving cooperatives do nothing about creating value then they and their farmer suppliers will become locked into a permanent disadvantage relative to their competitors.

In a world of highly competitive well-informed markets the lumbering single purpose cooperative must reinvent their purpose or mode of operation to survive. US research indicates that cooperatives survive and prosper by creating value. Not one off cyclic or good fortune improvements, but solid year on year value creation.

What extra value is PPCS creating for its shareholder suppliers by persisting with the unwanted takeover of a similar structure in Richmond? What efficiency gains, what extra value would their planned takeover yield?

Just a bigger company doing more of the same – that’s the likely result. No added innovation and no extra value creation.

And the same risk lies in the GlobalCo merger, which seems to be drifting into a ‘deck chair rearrangement’ merger, rather than a purposeful ‘we know the way’ cooperative.

Where is the leadership? Who is showing the way?

Good farming




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