Boston Consulting Supports Global Dairy

As the farmer vote for Global Dairy Company approaches, there is a huge amount of press, much of it confused, about the views of advisors to the New Zealand Dairy Industry

The Boston Consulting Group (BCG) has worked with the industry for over ten years including jointly preparing the so-called McKinsey Report on Industry Structure, which recommended a single, integrated organisation as the best way to maximise the value for farmer shareholders. In addition, BCG has worked extensively with the marketing arm of the industry, both in the New Zealand Milk and NZMP businesses.

‘There has clearly been some misrepresentation of our views and we would like to set the record straight’ said Alan Jackson, Head of The Boston Consulting Group in Australia and New Zealand.

‘We firmly believe that the formation of GDC is the best way forward for the entire New Zealand dairy industry. The Dairy Board, as the single marketer, has built an enviable position in the world market and continues to compete successfully against strong international competitors. As global dairy competition intensifies and our local industry consolidates, it is now the critical time to move to full integration and eliminate the unproductive aspects of competition between the cooperatives.

Our experience, both within the industry and with leading global organisations, has clearly established that a single, integrated organisation is the best option for the New Zealand industry. It ensures that the industry has the scale to maintain and build its powerful in-marketing organization.’

BCG believe that the industry must continue to operate under cooperative principles and dispute the arguments that GDC will lead to loss of farmer ownership and control or to greater levels of inefficiency. ‘There is no reason to believe that GDC will not perform as efficiently as a listed entity. Farmers demand performance, global competition demands performance and the mechanisms required to deliver this performance have been agreed with strong commitment to implementing these. Other cooperative entities have developed strong global positions and deliver strong financial performance; so too will GDC.’

‘This is a very exciting opportunity for the New Zealand industry, and one that farmers must take advantage of now. We fully support the formation of GDC.’

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