The Dairy Merger Now Requires Shareholder AgreementThursday, Dec 21, 2000
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
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.