Keep The Industry Together

Article by John Roadley, Chairman of Global Dairy Company,
first published in the Waikato Times on 13 June:

There are only 14,000 of us, living far from the world’s main markets. To take on the world and win, the dairy industry must maintain its focus, scale and unity. These are the key issues for Monday’s vote.

For fifty years, the success of the New Zealand dairy industry has been built on our unity. The market we have faced internationally has been regulated, protected and distorted in favour of our competitors. Only our united front has given us the scale to enter that market and succeed.

Our unity and scale have meant we’ve been able to build some of the world’s most popular dairy brands. Our marketing networks now span every continent and almost every country. Internationally, we’ve developed a reputation for quality, reliability and food safety that is second to none. And co-operative principles mean that we, the dairy farmers, own it.

Through the years, the structure of our industry has evolved as new international challenges have arisen and New Zealand dairy farmers have always made the right decisions for the industry. Now we face a new challenge – globalisation.

Globalisation is creating new winners and new losers. In every industry, not just dairying, companies are merging at an increasing rate to get the scale they need to stay afloat and thrive in a single international market. Whether the product is air travel, toothpaste, soft drink or vehicles, it’s the big companies and the big brands that are leaving others in their wake.

The dairy industry is no different, with one major merger or acquisition every two and a half days. Every week, our competitors are getting bigger and more powerful – and so too are our customers.

Standing still is not an option for our industry, just as it never has been, and everyone in our industry recognises that. For us to rest on our laurels would be like the successful corner shop standing still when a new supermarket opened across the road.

In a globalised world, we need to aspire to be one of the world’s biggest half dozen dairy companies. The efforts of at least three generations of dairy farmers mean we’re better placed than most to make it.

The merger of Dairy Group and Kiwi with the marketing structure of the Dairy Board will ensure we maintain our unity and scale under the ownership of New Zealand dairy farmers. It will also bring together the manufacturing and marketing arms of our business so that our industry will be working to one set of objectives for the first time.

We will be able to act as one powerful New Zealand dairy co-op when considering joint ventures – such as that with Dairy Farmers of America, the world’s biggest co-op – or the best possible acquisitions. Our manufacturing operations will be much more in tune with our marketers offshore, bringing cost savings and better customer service. We’ll be able to have a co-ordinated R&D strategy to learn more about the proteins to be found in milk to develop new, higher-value products.

This is why Warren Larsen has described the merger as “essential” to achieving our strategic plan and why the boards of all three organisations unanimously back the merger.

We have just one chance to achieve this merger or risk having the two companies go their separate ways, breaking up the assets of the New Zealand Dairy Board in the process. Every vote will count. I urge all shareholders to vote “yes” on Monday.

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