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Mega Coop - Can it get up to Speed

Greetings Readers

The news today that Snow Brand the leading Japanese dairy products producer and processor has made its first loss in 50 years as a result of a major food poisoning outbreak last year is a warning to NZ producers.

Consolidation of our farming industries into large single brand organisations is a two edged sword. Efficient production, distribution and marketing functions gives an edge to the large organisation but if the production quality control system breaks down - as the Snow Brand system did - the disaster compounds.

In the instance of the 'Mega Coop' the shareholder producers will directly carry the cost of such a break down. Not that the immediate losses won't be carried by insurance but the real loss is the rejection of the companies' products by the market and a collapse of market confidence in the brand.

The demand on management and management systems employed by the $30 billion 'Mega Coop' will be far more exacting than the current wholesale distribution system employed by the NZ Dairy Board.

While the board has some experience in its joint operations with retail market management the future functions will be vastly different. Higher risks for the increased market return expected from retail marketing will show in the farmers' pocket - either way.

Can the dairy industry leaders ensure that the new organisation will be up to speed to manage the exacting task ahead for an industry that will become the predominant source of pastoral income for New Zealand farmers?

Beware of the nursery story - "for want of a nail the kingdom was lost!"

Good farming

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