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.
At issue is the commitment of the two large players and how they can restore trust in the industry for farm investors and owners, he says.
The Australian Competition and Consumer Commission last week approved Saputo’s takeover of beleaguered co-op Murray Goulburn; the takeover when completed will leave no big dairy co-ops in Australia.
With MG in its fold, Canadian dairy giant Saputo will edge out Fonterra to become Australia’s largest dairy player.
The ACCC decision requires Saputo to sell the MG Koroit Plant in western Victoria.
Spencer, Fresh Agenda, told Dairy News he wasn’t surprised by the ACCC’s decision. For the Australian dairy industry, it means competition will not ease, he says.
“Another player will get a larger foothold with access to Koroit and its milk supply and there will be no dairy co-op in the future.”
Spencer noted that MG has been in a weak state for years.
“So the nature of processor-farmer relations, the market shares of milk intake and the product mix of the industry will evolve further.
“We’ve got a fair way to go before change is over. I’m not sure it means the industry will grow as a consequence of the loss of MG, but that depends on the commitment of the two large players and how they can restore trust in the industry for farm investors and owners.”
