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Can GlobalCo Foot It With The Big Lads?

Greetings Readers

There should be more than a little concern in the minds of the dairy industry shareholders as the hopeful projects to place GlobalCo in a strong international trading position start to unravel.

Today the Dairy Board announced it has pulled out of a half-billion dollar plan to buy 51 percent in Brazil's fifth largest dairy company Grupo Vigor, first announced as a planned purchase last September.

One big investment project falling over could be seen as bad luck, but when put alongside the challenges from competitors with more funds than the NZDB has offered for the Bonlac Joint Venture the magnitude of the task that GlobalCo is taking on becomes a little clearer.

Without successful and profitable investments in substantial international processing and marketing operations GlobalCo will continue trapped in a role similar to that held by the NZ Dairy Board in the past - predominantly a wholesaler of bulk product.

Growth to a $40 billion company will not be easy and the Brazilian termination is now more than walking away from an overpriced deal. It is also walking away from accessing a population of 150 million people with products, technologies and skills that were to give NZ shareholder farmers a return. That 10 to 20 cent lift in returns was to enable NZ dairying to maintain an edge as producers of quality product.

Putting aside the capital need, is the industry equipped with the resources, the personnel, the skills and the determination, right now, to see through these large projects in a highly competitive environment amongst some of the world's larger corporations? Can our new structure "foot it" with the big boys of the international food industry?

The reality of arriving late on the international corporate dairy scene may have a price - a price that we as producers may not have realised we will have to pay.

But even more importantly as the payers and electors of directors to the GlobalCo Coop, are the policies in place to drive executive performance to the levels required to do the catch-up?

The industry is facing the familiar family farm business problem - if we go without and work hard today we may be wealthy some time in the future - but in this industry there are no guarantees.

But even worse, producers think they have been promised good returns - NOW!

The discussions at the shareholder meetings will be interesting.

If they focus on the future, the objectives, the systems and the structures there is hope.

If it focuses on realizable value today, its equitable distribution, scraps of paper and past inequalities - we are buggered!

Good farming




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