Cooperative Farming Industries Loosing their WayMonday, May 28, 2001
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
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?