What Would Synlait Be Worth to Fonterra or a2 Milk?
Speculation of a possible joint move by Fonterra and a2 Milk to buy Synlait raises a much bigger strategic question, says agribusiness expert Dr Nic Lees.
In an exclusive interview with Dairy News, Peters says the deal, which won overwhelming support from Fonterra dairy farmers, doesn't make long-term commercial sense. He says just selling milk powder is not the answer.
"What you have got here is an overseas company who will be in control to the extent that when they make the decision in probably three years' time about future milk supply, NZ will become the price taker, not the price maker, and all the added value in the dairy industry could be lost," he says.
He says farmers have taken a 'sugar hit' and a brand such as Anchor, which came into being in 1886, will disappear out of NZ hands. He says this and other brands have been very successful over the years.
"Saying it's too costly to maintain these brands is balderdash. Edendale is not a billion-dollar operation. It is helping, and you have got other partners and companies where their plants are being used by Fonterra, such as the powder packaging plant in Christchurch and end milk processing facility in Hawke's Bay," he says.
Peters likens the Fonterra sale to the time when farmers voted to get rid of the then Wool Board to save money. He says the country has paid dearly for this. He says he does know something about the dairy industry having milked cows when he was still at school. He says since he's been in parliament, farmers have at various times asked for assistance. One example he cites is when the US currency was very high and that this was damaging the whole farming community.
"When will they ever learn that the economies that understand how to make real wealth ensure that they are as zealous as possible about the income coming from all aspects of their products. They might note that the Irish have never sold their Kerrygold brand," he says.
Peters says there has been a lack of information about the sale in the public arena and he's accused Fonterra of not fronting up to media requests. He's also accused the mainstream media of being 'shallow' in their reporting of the issue.
Peters says this is not just about this generation of dairy farmers, but about the next and the one after that. He says farmers talk a lot about how important they are to the national interest, but often personal interests take over.
"The only way we are going to succeed is when the national and personal interests are aligned," he says.
