Dairy structure questioned

Press, 20 September 1985, Page 7

Dairy structure questioned

PA Wellington The dairy industry’s structure provides poor accountability to the farmers who own it, according to a Treasury official, Mr Peter McKinlay. Dairy co-operatives had served farmers well in the past but there were “one or two storm clouds on the horizon,” he told the conference of the Wellington branch of the Dairy Industry Managers’ Association in Palmerston North. Neither the traditional idea of control through voting power nor the market reality of control through sale was open to farmers. He cited the recent closing of the Dalefield Cooperative Dairy Company in Wairarapa as an example. “From what little I know

of that particular collapse, it seems that there was little awareness of what was happening within the co-operative until a receiver was appointed.” Mr McKinlay advised farmers to consider a new structure for dairying.

Successful firms of the future would employ managers who were experts on structuring organisations, finance and marketing. New Zealand companies should restructure themselves along overseas lines to incorporate a management buy-out.

“What this means in reality is that managers can expect to enjoy substantial wealth gains if they are successful but suffer severe personal loss if they are not,” he said.