Elders Limited is considering a bid for Bonlac Foods - demutualising the Victorian dairy co-operative.

There may be appeasing arguments about retaining grower control of Bonlac but what this means remains to be determined. Co-operative democracy is clear and explicit - one vote per member and a board primarily of grower members.

This consideration by Elders is opposed to a current proposal for the New Zealand Fonterra Co-operative Group to increase its stake in Bonlac from 25% to 50%.

The Elders threat is positive in that it could provoke the members of Bonlac to decide how important it is that their business remains a co-operative.

Elders Limited is a major Australian agribusiness with 400 branches and agencies throughout Australia. It is involved in banking, wool, insurance, real estate, livestock, merchandise and risk management.

In 1995 Elders purchased the Victorian Producers Co-operative Co Ltd. For a background case study by John Gill leading to this purchase.

In 1996 Elders was acquired by Futuris Corporation. Futuris has two key divisions - Elders and Air International. Futuris has 7000 staff worldwide and 20 business units. Futuris was first listed on the Australian Stock Exchange in 1981.

Bonlac Foods is a manufacturer of dairy products. It is the largest Australasian producer of butter, cheese, whole milk powder and skim milk powder. It exports half its products. It has an annual income of A$860 million. It is 75% owned by dairy farmers in Victoria and Tasmania and 25% by the Fonterra Co-operative Group Limited.

Fonterra Co-operative Group Limited is owned by 13,000 New Zealand supplier shareholders. It's annual turnover is US$6.8 billion and assets US$5.8 billion. Ninety five percent of its production is exported and it generates 20% of New Zealand's export receipts.

Bonlac has undertook a series of meetings with supplier members seeking support for the Fonterra proposal to increase its stake from 25% to 50%. Bonlac is planning for a member meeting to vote on the proposal in August. It will require a 75% majority.

Last updated: 03-Jul-2003 12:40 PM

For information on the the three major players:

Bonlac Foods Limited

Fonterra

Elders Limited

Futuris Corporation

In 2001 there were 12,800 dairy farms throughout Australia - 7600 in Victoria. They were producing 10.6 billion litres of milk per year. Source: Bonlac Foods Limited, Dairy Farming in Victoria & Tasmania, 2003

See also:

An analysis of the demutualisation proposals for Pivot.

An analysis of the proposed and failed demutualisation of the Warrnambool Cheese and Butter Factory.

An analysis of co-operatives and demutualisation.

An analysis of co-operative's and governance.