Recently there was an opportunity to achieve economies of scale through a proposal to merge Alliance and PPCS. We understand PPCS wanted to merge and Alliance, it seems, do not.

Many farmers see Alliance’s refusal to merge as a wasted opportunity for the wider sheep and beef industry. The merger had clear farmer support, and there were many reasons why it would have been a success and taken meat procurement, processing and marketing to a new level.

But Alliance decided to take an overly cautious short-term option, pointing to the erosion of their equity as the main reason for not merging.

There are strong analogies here with the dairy industry around the turn of the millennium. The analogy between PPCS and Alliance on the one hand, and the two largest dairy co-ops in the 1990s on the other hand, is remarkable. One was an aggressive dairy co-op with a strong vision that set about to rationalise and take risk.  It merged with other dairy companies and created critical mass, increasing productivity and profit.

Meanwhile the other dairy co-operative was focussed on the details of operating its business, and building up its reserves.  Eventually the forces of reason prevailed and Fonterra was formed. 

Fonterra might have its critics but I’d wager that few farmers would want to turn back the clock to what we had.

We needed a leading company with strong farmer support and a unity of purpose. We can all see in hindsight the sense of that merger, and it was worth the effort.

I call on farmers to encourage meat company directors to take the brave steps that will build a company large enough to bring stability to the whole meat industry.

Farmers too have another important change to make. Strong companies require strong supplier loyalty. But this is a two-way street.

Trading at the gate must stop and be replaced by long-term supply arrangements from the farmer to the processor of their choice.