MEGA MERGE OR ELSE…Tuesday, Nov 28, 2000
A visiting US Professor reminds us again of the executive posturing and political posing that comes with cooperatives and particularly in the case of dairy cooperatives.
His report highlights the sad fact that in consolidating the NZ dairy industry over the past 50 years it has only happened when one company in a merger has reached a crisis. Up until the day of their demise and in most cases for many years after, suppliers and employees claim it was never necessary and we could have successfully continued on, but for…
The New Zealand Dairy Industry has been very production orientated and rightly so. It was formed to serve the producers of milk, for their commercial well being over the long term. Not some airy-fairy corporate trading enterprise driven by the whim of capital return bartered out on a stock exchange.
The research has been done, the advice has been given and the reason for the need to complete the consolidation has been identified. It is this reason that has perhaps escaped the attention of the industries directors and executives as they fight their little battles for influence and position.
The most significant reason for the consolidation is to preserve market power against the giant trader and retail groups that are forming up to capture and control the production distribution and retailing of the products we sell.
Our industry is designed to efficiently fit our seasonal farm production to the year round requirements of the market and it works. Allow a conglomerate to demand year round milk production as a condition of supply and see where that takes NZ on farm production efficiency!
All the posturing on cost saving and efficiency claimed to be gained from a mega merger will be petty cash compared to the losses from downward price pressure imposed by the international conglomerates on a fragmented NZ dairy industry.
The words merge or perish cannot be shouted loud enough.