Silver Fern Farms can't lose as it deftly plays its cards in the latest high-stakes game with fellow meat co-operative Alliance Group.
Farmer politics are never straightforward and often illogical, and the debate over whether the two southern meat co-operatives should merge is no exception.
Ideally, Silver Fern Farms (SFF) directors would have approached the Alliance Group (AGL) board to get some consensus before publishing in newspapers open letters to shareholders of both companies seeking their views on whether the two should merge.
But behind all of this is a much bigger battle for the moral high ground and, in this regard at least, SFF cannot lose.
Should farmers overwhelmingly support the proposal in the SFF questionnaire the co-operatives merge, then SFF can rightly ask AGL why they are not listening to the wishes of their shareholders.
If the result is reversed or few people respond, then SFF can say they tried, shareholders have spoken, and this pushes the question of merging off the agenda.
Unfortunately, in an industry short on strategic thinking and where a lack of profitability means most farmers look no further ahead than to next lambing, this could be the result.
If it is, the industry will revert to type and the measure of success will once again be the price received for lamb on the day and the throughput achieved by meat companies. The full potential of the world's most highly priced protein will remain unrealised.
SFF chairman Eoin Garden sees a merger of the two co-operatives as the first step to an entity with scale and scope and which would eventually lead to the necessary consolidation of processing capacity.
This is linked back to his vision of a more market-led meat industry and the primary growth partnership investment by SFF, PGG Wrightson and Landcorp in Farm IQ, which he said would create a plate-to-pasture integrated supply chain.
This latest spat has also shifted the focus of the debate on to AGL chairman Owen Poole.
For the past four years, SFF has been focused on restructuring its business and financially recovering from the disastrous foray of buying Hawkes Bay meat company Richmond.
This allowed Mr Poole to dictate terms and set the agenda of industry reform by virtue of AGL's size but more importantly its financial strength.
His proposed Concept plan of two years ago, where companies representing 80% of red meat processing and exporting would merge, showed leadership and vision.
But it was seen as too prescriptive, and ultimately SFF withdrew when concessions were made to Anzco Foods, which wanted to exclude its beef processing.
Mr Poole says AGL has done four evaluations of a merger with SFF and rejected each one. He said AGL shareholders two years ago comprehensively voted against merging.
But that merger proposal, initiated by the pressure group the Meat Industry Action Group, was widely criticised as overly prescriptive.
Now, SFF is having another go, saying it wants shareholders to have their say. Ultimately, the SFF open poll on merging will either force the issue or remove it.
The environment has changed, with SFF no longer the financial lame duck it was, reporting equity as at September 30 of 70% and debt of $118 million, compared with 2007, when equity was 35.2% and debt $334 million.
Mr Poole calculated the Concept plan would add $5 to $10 to the price of a lamb received by farmers and benefits of $400 million would start being generated within 12 months.
Conversely, SFF chairman Eoin Garden said this year merging the two co-ops could generate $100 million in savings, a figure Mr Poole disputes as "grossly overstated", adding SFF's latest merger proposal would not address "any recognised financial hurdles".
Mr Garden claims AGL does not acknowledge SFF's financial transformation, saying Mr Poole keeps "defaulting to the analysis of three to four years ago", when assessing the merits of merger.
Little wonder shareholders say they are confused.
The concern must be that once again industry politics mean nothing is being done to address the wider issues of excess processing capacity, falling sheep numbers and low farmer confidence. Add into that mix the expectation meat companies will be chasing one million fewer lambs after September's killer week of storms.
Mr Poole is quite right when he says a new entity representing 75%-80% of the meat industry is needed to drive change, and that merging the two co-operatives to form just over 50% of the industry is not on its own sufficient to alter behaviour.
It would, nonetheless, be a start, but the game cannot end there.
To drive change, farmers must also commit all their livestock to one of the co-operatives, ending the Sunday auction between buyers.
Mr Poole said earlier this year committing stock to a single co-operative would force industry consolidation and ensure an enlarged co-operative would not be lumped with the costs of plant closures.
Farmer-owned co-operatives are the only avenue through which wider industry issues can be addressed, as privately owned or publicly listed companies do not have the same interests at heart as co-ops.
The recent takeover of Affco by the private and publicity-shy family-owned Talley's Group means, given its track history, it will always stay outside industry initiatives, evident by Affco being the only major meat company not involved in a partially publicly funded ovine-processing technology project.
This just leaves Anzco Foods, majority-owned by Japanese interests, as the only other substantial player along with a host of smaller companies.
The big fear is once again there is no resolution and the issue of meat industry structure continues to fester and soak up time, energy and money.
So why don't the two co-operative settle the issue once and for all? Would it not be best to replace supposition with fact by commissioning an independent analysis, then let the shareholders make up their own mind? It is, after all, their industry and futures which are at stake.
THE CO-OPS
Alliance Group, Invercargill
• Co-operative established 1948.
• 5500 shareholders and nine processing plants.
• Turnover for year to September 30, 2009, $1.5 billion.
• Net operating profit before tax and pool payments of $42.1 million.
Silver Fern Farms, Dunedin
• Co-operative established 1948 as market company Primary Producer Co-operative Society. Name changed 2008.
• 18,000 farmer shareholders operating 21 plants.
• Turnover for year to August 31, 2009, of $2 billion.
• Net operating profit before tax of $5.1 million excluding one-off gains.
