The chairman of Westland Milk Products says a sale of the 82-year-old co-operative is the best thing for farmer shareholders and the region.
New Zealand First has issued a warning about "erosion of New Zealand control" after the Westland board signed a conditional deal to sell to Chinese dairy company Yili Industrial Group.
- 'Erosion of control': New Zealand First's warning over multi-million-dollar Westland Milk deal
- Westland Milk secures funding for high value product development
It's offered $588 million to purchase the co-op, and the 429 farmer shareholders will vote on the deal in July.
NZ First Primary Industries spokesperson Mark Patterson said on Wednesday the Westland Milk board needed to "consider carefully the consequences of voting in favour of the sale".
However, Westland Milk board chairman Pete Morrison told Rural Exchange that it would be a positive move for everyone.
"It is sad that we haven't been able to have a competitive payout, also acknowledging that we need that on the East Coast and Canterbury, that's what our farmers want and this is a good way forward," he said.
He said the co-op's financial situation is a concern.
"Our debt is huge; we haven't got a competitive milk payout - we haven't had for a number of years, and we are not going to again this year.
"Things are difficult heading into the future, and we are going to have to have retained earnings, so we will lose milk supply - and the moment you lose milk supply to other milk companies, it's not a good place to be."
Morrison said the sale would be a positive way forward.
"It keeps our co-op together, it means everyone's milk is picked up for 10 years, and they get $3.41 in the pocket."
Pete Morrison said Yili Industrial Group would own all the shares, but have a strong commitment to improve the brand and take it into Asia.
He said Yili is already a good corporate citizen in New Zealand, through it's ownership of Oceania Dairy Limited.
"They have a good attitude to their farmers, so it is very positive for us all."
Meanwhile he said the $9.9 million load pledged to Westland Milk by Regional Economic Development Minister Shane Jones is off the table, with a sale looming.
"We never completed on that - no money has been taken, no deal has been signed."
Westland Milk will seek shareholder approval for the proposed transaction at a special shareholder meeting, which is expected to be held in early July 2019.