Town piv­otal in dairy his­tory

Roots of a gi­ant re­vealed

South Waikato News - - NEWS -

Pu­taruru can lay claim to be­ing one of the most in­flu­en­tial places in the coun­try for lead­er­ship in the dairy in­dus­try, a new book re­veals.

Till the Cows Came Home by Clive Lind is the story of how New Zealand and its dairy in­dus­try had to turn it­self around once Bri­tain an­nounced it was join­ing the Euro­pean Eco­nomic Com­mu­nity (now the EU) in 1961, fi­nally suc­ceed­ing in 1973, a move that would ex­clude ex­ports from New Zealand.

The book tells the story of how co-op­er­a­tive dairy com­pany merg­ers started to ac­cel­er­ate as tech­nol­ogy im­prove­ments and a com­pet­i­tive pay­ment sys­tem de­rived by the sole statu­tory ex­porter, the New Zealand Dairy Board, had a huge ef­fect.

At the same time, the board had to find new mar­kets around the world be­cause the de­ci­sion to join the EEC meant ex­ports to Bri­tain, which had been tak­ing 95 per­cent of all dairy ex­ports, would start to wither.

Many of those mar­kets were heav­ily pro­tected by sub­si­dies and puni­tive tar­iffs and New Zealand politi­cians and busi­ness lead­ers had to bat­tle hard to make head­way, a sit­u­a­tion which re­mained un­til the com­ple­tion of the Uruguay GATT round in 1994 and the es­tab­lish­ment of the World Trade Or­gan­i­sa­tion.

‘‘It’s a quirk of ge­og­ra­phy that two of the most in­flu­en­tial lead­ers in the dairy in­dus­try should come from one rel­a­tively small area,’’ au­thor Clive Lind said.

‘‘First, there was Jim (later Sir James) Gra­ham who farmed in Pu­taruru and was per­haps the first dairy in­dus­try leader who could com­mand mas­sive re­spect on world stages. He be­came chair­man of the Dairy Board in 1982 af­ter be­ing a di­rec­tor of the New Zealand Co-op­er­a­tive Dairy Com­pany rep­re­sent­ing the Pu­taruru, Toko­roa and Ro­torua ward.

‘‘He had to pla­cate Amer­i­cans an­gry over New Zealand’s anti- nu­clear stance, con­sole fu­ri­ous French who had been caught out badly in the Rain­bow War­rior af­fair and deal with the Soviet Union when we needed them des­per­ately to buy our but­ter and they needed us to pro­vide ex­per­tise to help them lift their ex­ports. It was a strange sit­u­a­tion

‘‘Then there was Henry van der Hey­den (later also knighted) who played a mas­sive role later, when the com­pa­nies had come to­gether with the Dairy Board af­ter years of ne­go­ti­a­tion, dis­agree­ment and pos­tur­ing and formed what be­came Fon­terra.

‘‘He too came from the Co­op­er­a­tive Dairy Com­pany which had be­come Dairy Group in the mean­time, and was ini­tially nom­i­nated by Jim Gra­ham for that post.’’

Sir Henry played a cru­cial role in help­ing to form Fon­terra at the end and he be­came the com­pany’s sec­ond chair­man, Lind said.

‘‘In­ter­est­ingly, at the out­set, both men used the same tac­tic when it came to get­ting on to the dairy com­pany board. They took time out and vis­ited ev­ery farmer in the ward that they could. It earned them votes but it also meant they knew who they were rep­re­sent­ing in co-op­er­a­tive com­pa­nies where such things mat­ter.’’

Lind de­scribed the sur­vival of the in­dus­try as a mir­a­cle.

‘‘First there was a Labour Gov­ern­ment which brought about huge change, and sin­gle-sell­ers weren’t part of its philoso­phies. Then the re­turn of a Na­tional Gov­ern­ment in 1990 brought many who be­lieved the same thing.’’

Till the Cows Came Home tells how grad­u­ally there came a re­al­i­sa­tion fol­low­ing nu­mer­ous con­sul­tants’ re­ports that there should be one co-op­er­a­tive com­pany. Not ev­ery­one agreed, and oth­ers could make a case for two ma­jor com­pa­nies. There al­ready were two such com­pa­nies

as merger fol­lowed merger. Apart from some small com­pa­nies, New Zealand Dairy Group and Kiwi Co­op­er­a­tive Dairies were the ma­jor play­ers. Ar­guably, both were big enough to go on their own. But what of the Dairy Board, and where would it fit in? In the end, dairy farm­ers them­selves through some cru­cial elec­tions sorted the is­sues. Some com­pany di­rec­tors were ahead of their farmer sup­pli­ers who still saw the value of one sell­ing or­gan­i­sa­tion work­ing on their be­half. If there were two such or­gan­i­sa­tions, they would in­evitably com­pete with them­selves and prices would drop.

One large com­pany, how­ever, was no fait ac­com­pli. On the in­dus­try’s first at­tempt to con­vince the Com­merce Com­mis­sion, it was turned down on nu­mer- ous grounds by an au­thor­ity bound to look at the ef­fects of such a merger on New Zealand, not in­ter­na­tional trad­ing.

And so a plan was hatched to avoid that, by mak­ing a com­pre­hen­sive case to a newly- elected Labour Gov­ern­ment that new leg­is­la­tion to re­struc­ture the dairy in­dus­try was the only way both the in­dus­try and the best in­ter­ests of New Zealand as a whole could be sat­is­fied and the coun­try and in­dus­try could progress.

It was a plan that de­pended on 75 per cent of el­i­gi­ble dairy farm­ers sup­port­ing it un­der co­op­er­a­tive com­pa­nies’ leg­is­la­tion, an over­whelm­ing sup­port level that could not be guar­an­teed un­til the end.

Mas­sive change does not come about with­out strong­willed in­di­vid­u­als.

‘‘What made Till the Cows Came Home so in­ter­est­ing to write were the large per­son­al­i­ties in­volved,’’ Lind said. ‘‘The chair­men and di­rec­tors of the Dairy Board came from dif­fer­ent com­pa­nies and they were ex­tremely proud of what had been achieved.

‘‘They were fiercely com­pet­i­tive among them­selves at the man­u­fac­tur­ing end. In­ter­na­tion­ally, how­ever, they could see how work­ing to­gether made sense.

‘‘But when it came down to a new struc­ture for the in­dus­try, they re­ally wanted some­thing dif­fer­ent and that in­evitably was go­ing to mean the end of the Dairy Board it­self.

‘‘ It was fas­ci­nat­ing to record how dis­trust among them­selves turned to con­sen­sus and then to agree­ment.’’ Till the Cows Came Home is avail­able at all good book­stores, RD1 and Farm­lands.

GAME CHANGER: Sir Henry van der Hey­den of Pu­taruru played a ma­jor role in the cre­ation of Fon­terra. INSET: Au­thor Clive Lind

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