Three milk companies stay out of conglomerate fold

Friday 6th July 2001

By Chris Hutching

Supporters of Globalco were toasting the long-awaited appointment of ex-Kiwi Dairies chief executive Craig Norgate this week but the Westland Dairy Cooperative was looking to a different future as one of three remaining independent dairy companies.

The decision by the 383 suppliers to go it alone had as much to do with geography as ideology.

Although often described as small with just 2.8% of the market, Westland Dairy has annual turnover of $200 million.

Based in Hokitika, the co-operative accepts milk from suppliers between Karamea and Franz Josef Glacier.

Those suppliers were mindful of the barrier posed by the Southern Alps and the distance from Globalco's main processing plants in Canterbury.

Even in North Canterbury, would-be suppliers in Culverden have been told not to bother because they would be too far away for economic milk collection.

So the suppliers backed the recommendations of their board of directors and senior executives that they would be best to develop their own marketing or enter into contractual arrangements with Globalco while retaining their independence and control.

Chief executive Terry Norwood said yesterday the price Globalco was prepared to pay didn't match their expectations of what the company was worth.

Its significance to the region was also a factor in farmers' minds. It was one of the largest businesses in the region.

"We have to make our own marketing arrangements although that doesn't preclude any arrangements we have with the Dairy Board.

"And it presents a number of opportunities for us we've not had before. This isn't a slap in the face for Globalco, it's just the way local dairy farmers want to go because of the significance of dairying to the region."

Mr Norwood said Westland Dairy retained a good working relationship with the one of the remaining independent dairy companies, Morrinsville-based Tatua, which has developed and markets its own manufactured products.

The third remaining independent dairy company is Southern Fresh, Invercargill, which is in a vulnerable position with the collapse of a 10-year contract worth $60 million with Movenpick Asia Pacific.

The board of Southern Fresh had earlier fielded bids from subsidiaries of Kiwi Dairies and NZ Dairy Group but yesterday chairman Lex Bagrie declined to discuss the progress of crisis talks between the board and other parties.

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