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The Dairy Merger Now Requires Shareholder Agreement

Greetings Readers

The long awaited announcement is out. The Dairy Industry will proceed with the ratifying process of the merger agreement presented today.

It has been a long and torturous route with many casualties in the leadership ranks but also in the rank and file as delays have caused hopes and aspirations to be abandoned.

Now that the basic principle of cooperative ownership has been accepted farmers can approach the proposal with a degree of objectivity to ensure that the management of the organisation answers to the needs of the producer with equal consideration to the market. It is this balance that is so critical to the success of a producer owned and directed organisation.

The merger agreement is set out below and has some interesting clauses. Not the least is the handling of the probable valuation difference between the two companies. No information on the financial structure and viability of the new organisation has been shown. Lets hope there is no "devil in the detail" when presented.

Assessment of the effects of a consolidated payout on the current season's payout is also difficult assuming some instability of the current structures as the merger unfolds.

Having reached this remarkable consolidation decision point, for a farmer owned cooperative, the focus will need to shift to the influence and exercise of control that will be available to the individual suppliers.

The potential for a "tyranny of centralized power" cannot be allowed to occur by chance. Although the structure outlined has the appearance of being designed to ensure supplier participation. How well and how effective the suppliers are in ensuring the company keeps them informed and listens to their concerns will unfold - for better or worse.

For one sector of the pastoral industry there appears positive potentials from their processing and marketing structure. Perhaps the wool industry can take heart in the difficult process that lies ahead for them, in re-establishing a producer marketing influence.

Good farming - both inside and beyond the farm gate.




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