Dairy Cooperative OKTuesday, Apr 10, 2001
There may have been a collective (cooperative?) sigh of relief through the nations cowsheds last night.
The government has approved the dairy regulatory package and the business with a few conditions will
be passed back into the hands of the farmer shareholders - where one hopes it will remain.
A few commentators are betting both ways on this package with their concerns about the bad factors of
monopoly supply of milk and milk products to the NZ market and the risk that farmers are exposed
to with and without such a giant coop.
It seems that local market equalization price structures that have been in place for the past 65 years
are not seen as monopolistic - they are - and they have worked to the benefit of both consumer
and producers for the past sixty years..
Guaranteed prices and compulsory purchase by the Dairy Products Marketing Authority are the origins
of the mega coop that suppliers will commence supplying next season
This Labour Government should have the thanks of today's dairy farmer for providing the legislation
to consolidate and perhaps in the future deconstruct a very large industry on a more equitable basis
than likely under a competitive model.
Today's industry should also thank the first Labour Government of 1935 for the complex farmer political
beast it created out of a desperate period of payouts of 4d per pound butterfat. It is on the
back of that early legislation and a good deal of effort and technology that the platform was built
for the NZ dairy farmer's relative prosperity today.
Payouts based on average cost of manufacture were the invisible stick that has driven the consolidation
of the industry and efficiency improvements. We have now very nearly reached the end of that cycle.
Two or three years and it will become a little clearer if 'bigger is better' and efficiencies
improve. If not it will be into the start of a whole new cycle.
The proposed legislation has some interesting new and creative options included for shareholding and
supply. How these are utilised and built on is an excitement in store. It could be by design perhaps;
even accident, that there is enough 'stick' included in the proposed regulation to keep the giant
coop's executive and directors honest and pushing hard
Lets hope the industry proves the critics wrong and the unsaid reasons for farmers continuing in a cooperative