Addressing a meeting of 150 shareholders in Milton yesterday, Alliance chairman Owen Poole outlined his concerns about a merger of the two co-operatives, saying it would have 50% of the industry, not enough to influence behaviour in either livestock supply or markets.
The Commerce Commission would require plant sales or closures in the South Island, where the two companies had 80%-85% of the processing assets.
There was no obvious support among the audience for the two to merge.
Alliance chief executive Grant Cuff spoke at length about the flaws he saw in the Silver Fern Farms (SFF) proposed merger with PGG Wrightson (PGGW), saying SFF was using it to play catch-up with Alliance in providing markets with specified lamb cuts and quality.
He said the proposal diluted farmer control, PGGW was trying to protect its own base while clipping the ticket through procuring livestock and also sharing in company profits.
Mr Poole also delivered a broadside at the Meat Industry Action Group (MIAG).
The lobby group has called special meetings of the two co-operatives to discuss 11 remits advocating a merger with SFF ahead of wider industry aggregation, remits Mr Poole described as prescriptive, divisive among shareholders and against the legal requirement that directors act in the best interests of the company.
Directors would have no choice but to reject them.
"MIAG has moved from a ginger group pressing companies to improve returns to farmers, to one offering, promoting and endeavouring to impose industry solutions."
Alliance rejected SFF's offer to discuss a merger, saying it did not add up commercially, it would not provide industry aggregation or retain farmer ownership.
A merger of 80% of the industry had the scale and ability to influence behaviour, but 50% would still allow farmers to sell to other companies, and give markets a choice of supplier.
"People will go round you both ways," he said.
Once farmer ownership was lost, he said it was "largely irrecoverable".
"If you sell your soul for silver, the price must be compelling."
Mr Poole said his board still supported the creation of a farmer-owned entity representing 80% of the meat industry, but acknowledged that option had lapsed with two of the four large companies publicly saying they would not reconsider such as merger.
Alliance was doing likewise, he said.
"Alliance is reviewing a number of opportunities to grow the business and aggregate volume," he said.
Mr Cuff said lambs should be worth $70-$80 each at the peak of the season, but shareholders asked if that was enough.
Shareholders also asked about the proposed SFF-PGG Wrightson merger, and if that could be the start of a larger industry merger, to which he said those companies were pursuing their own strategies.
Mr Poole was also asked whether a forecast of three million fewer lambs in the South Island this year would result in a procurement war. "Certainly not," he said.
"But there could be a bit of procurement tension."
