Mega-merger of dairy industry was 'miracle'

AUTHOR: Clive Lind.
AUTHOR: Clive Lind.

It was a miracle the New Zealand dairy industry, with it's strong-willed people and philosophical conflicts, completed the mega-merger that formed Fonterra, says the author of a new book.

Clive Lind, a Fairfax executive and former daily newspaper editor, spent three years researching and writing Till the Cows Came Home, to be published mid-next month.

Through the eyes of key industry people he interviewed, Lind tells the stories behind the multi-billion dollar industry - from 40 years ago when the single-seller Dairy Board was jolted into an urgent search for new markets when Britain started talks to enter the European Economic Community, to the emergence of added-value products, the economics-driven consolidation of more than 100 dairy companies into less than a handful, to the writing on the Beehive wall for the single-seller producer board and the efforts of the industry to find a structure solution for the future.

Highlights of the research for Lind included discovering the huge power vested by 1961 legislation in the Dairy Board - "it could do anything it liked as long as it wasn't illegal" - and interviews with industry leaders James Graham, Dryden Spring, John Storey and other key players.

Lind says his book does not comment on the merits of the decision to form Fonterra, from a 2001 merger of Waikato's New Zealand Dairy Group, Taranaki's Kiwi Dairies and the Dairy Board.

But his personal view was that there was no other logical way to handle the necessary industry reform.

The extent of the shareholdings and associated value the two big companies held in the Dairy Board was a deciding factor, Lind says.

Neither Kiwi or Dairy Group could have afforded to go their own way given the value invested in the board, he said. "That was pretty sobering."

Dairy industry politics have never been for the faint-hearted, and Lind agreed the industry was "very political" with "hugely strong-willed individuals", particularly in the years leading to amalgamation.

"At a superficial level they got on well, but when they weren't with each other they did not trust each other.

"It's a miracle the whole thing came together. There was a need for change but farmers themselves had a view, and they certainly supported the Dairy Board. Then there were the companies. The conflicts were huge."

Lind, who has written 12 other books, started on his latest work after former Dairy Board chief executive Murray Gough commented on the "remarkable turnaround" in the dairy industry in the last 40 years.

Waikato Times