18 June 2001 Dairy merger decision victory for common sense says Lincoln professor

Dairy farmers have come up with the "common sense" decision in approving the formation of Global Co, says Lincoln University's Professor of Farm Management and Agribusiness, Keith Woodford.

"The decision provides an opportunity for the country's dairy industry to move forward to a new level," he says.

"There will be many challenges in making the  new organisation operate efficiently, but compared with the alternative of dismembering the New Zealand Dairy Board between the two major owners, Kiwi and New Zealand Dairy Group, the Global Co option is the better choice.

"Farmers have thought hard about the issues and come up with the common sense decision," he says. "Success or failure in the future will now depend on the business decisions that Global Co makes in a highly competitive international market.

"The industry will now have to focus on how it is to achieve its international growth objectives. Recent claims by industry leaders such as NZ Dairy Board CEO Warren Larsen that within five years the industry must become one of the five largest players of the international dairy industry need careful scrutiny.

"Trying to grow at such rates is a high risk strategy. To suggest that Global Co can become such an international giant when it will be producing less than two percent of the world's milk may be neither necessary nor feasible. Global Co needs to identify the market niches where it can operate most effectively," says Professor Woodford.

Ian Collins, Journalist, Lincoln University, Canterbury, New Zealand