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McKinsey & Co. Recommends Farmers Support GlobalCo

McKinsey & Company Recommends Farmers Support GlobalCo

McKinsey & Company’s New Zealand head Andrew Grant says the company’s work on dairy industry restructuring is being misinterpreted by a group calling itself Farmers for a Better Dairy Deal.

“McKinsey & Company has worked for the dairy industry for a number of years, assisting it with the development of its strategic plan and an appropriate structure to deliver that plan,” Mr Grant said today.

“In that time we have examined dozens of different structures to assist the industry to reach its potential.

“Our analysis leads us to recommend the GlobalCo proposal.

“In our view the preconditions we identified in 1999 for a single company are on track to deliver a successful outcome, and we rate the work in that area 8 out of 10.

“Our preference would have been for independent directors and a Chief Executive to have been appointed earlier in the process.

“More important, however, is ensuring that the new organisational model the company adopts puts real pressure on managers to perform – significantly more than today. This is the ‘catalytic’ event we have referred to in our report.

“Shareholders, directly and through their elected Shareholders’ Council, must also ensure they maintain pressure on the company once it is formed.

“The claim by Farmers for a Better Dairy Deal that a two-company model would deliver gains of $800 million a year over GlobalCo is wrong. The McKinsey & Company work said exactly the reverse.

“While we value the group’s concern for delivering farmers the best possible future, we regret that this group has misinterpreted our work.

“McKinsey & Company’s work recommended that it is strongly in farmers’ interest to vote yes. In looking for a better future for farmers a ‘yes’ vote is clearly the right way to go.

“As we stated in 1999, there is an urgent need to settle structural issues to maintain the industry’s reputation in the international marketplace.

“Having come this far, we believe the marketplace would view a ‘no’ vote very negatively and the industry would lose considerable momentum.”


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