The future of the Westland Co-operative Dairy Company will be decided at a meeting in Greymouth today.
The Westland board has signed a conditional deal to sell to Chinese dairy company Yili Industrial Group. It's offered $588 million to purchase the co-op, and the 429 farmer shareholders will vote on the deal today.
However there is unease about the sale from some quarters. Agriculture Minister and West Coast MP Damien O'Connor is not happy that farmers could lose control, but said options were limited.
"Farmers have only been given one option. I know companies that have wanted to get more information from the company to progress a proposal, and haven't been able to," he said.
"So from a number of perspectives, it's not been ideal."
New Zealand First is also concerned at the possible sale. Primary industries spokesperson Mark Patterson said the Westland Milk board needed to "consider carefully the consequences of voting in favour of the sale".
"By selling their co-op for short-term gain they need to be particularly concerned for the more isolated farmers who risk being dropped when the 10-year guaranteed supply period ends."
He also warned about the "continued erosion of New Zealand control of the dairy industry", adding that there could be "long-term consequences of becoming price-takers at the end of a supply chain controlled by a foreign multinational".
However Westland Milk chairman Pete Morrison said the sale of the 82-year-old co-operative was the best thing for farmer shareholders and the region.
"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.
- 'Erosion of control': New Zealand First's warning over multi-million-dollar Westland Milk deal
- Westland Milk secures funding for high value product development
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 its ownership of Oceania Dairy Limited.
"They have a good attitude to their farmers, so it is very positive for us all."
The proposed sale meant the controversial $9.9 million loan from the Government's Provincial Growth Fund won't be happening. Economic Development Minister Shane Jones said it was 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 today.
If the deal is approved, it would need to be signed off from the High Court and Overseas Investment Office.