The country's largest farmer says there is nothing to fear from an investigation into the merits of a merger of the two meat co-operatives.
Landcorp chief executive Chris Kelly said he supported Silver Fern Farms' (SFF) proposal to investigate a merger with Alliance Group (AGL), saying the only downside, should it not warrant proceeding with, was expense and time.
"The fact is, we do need rationalisation in the industry, despite what some people say, but whether this is the catalyst or not, we will wait and see."
AGL chairman Owen Poole has written to his shareholders setting out his opposition to SFF's open letter, published in newspapers a week ago, which calls for expressions of interest from shareholders to investigating a merger.
He reiterated earlier comments the question was designed to drum up support for a merger when the issue was more complicated than that.
The SFF merger proposal failed to add up financially, and industry-wide aggregation was needed, not just a merger of two co-operatives.
The issue has been added to the agenda for AGL's annual meeting in December.
Landcorp has shares in both co-operatives, and a merger would not necessarily be the end game, Mr Kelly said, but could be a start.
"All I know is that we have got to do something, and this is a step in the right direction."
Shareholder agitation for reform of the meat industry was not going away.
"The companies are co-operatives, and if the shareholders of any company have strength in numbers, then they have to be listened to."
Southland Federated Farmers meat and wool section chairman Andrew Morrison said while he supported co-operatives and meat industry consolidation, an SFF-AGL merger would not resolve wider industry issues.
SFF and AGL handled about 52% of the nation's kill. Mr Morrison said any merger would have to be carefully managed to include a commitment from other meat companies to also participate and create an entity responsible for 80% of the country's meat kill.
A further requirement would be for co-operative suppliers to commit their livestock to the merged entity to avoid strengthening competing companies through leakage.
Mr Morrison said an entity handling 80% of the nation's meat kill, as advocated by Owen Poole, should be the goal.
Asked how Southland farmers had responded to SFF publishing an open letter to shareholders of both companies in newspapers to measure their appetite for a merger, Mr Morrison said many described it as unorthodox and confusing. They would have liked better quality communication.
Agriculture Minister David Carter has reiterated comments made to the Otago Daily Times in August that if presented with a united viable option, the Government would facilitate meat industry reform. He told Federated Farmers in Wellington the Government had a role smoothing consolidation of the industry.
