The Visible Hand
TIM COHEN: Milco is the cat that got Clover’s cream
The consortium saw value in the consumer goods group, but the buyout could shake up the dairy industry and leave farmers adrift
It’s been one of the tropes of government policy for the past zillion years that SA should focus on beneficiation of its raw materials. For all kinds of odd reasons, dairy company Clover is a good example of how difficult this is to achieve, and in some ways, the buyout offer announced this week is both a consequence and a possible solution to those difficulties. The short history of Clover is extremely long. The company was started by Mooi River dairy farmers over a century ago, as a buyer and processor of their main product, milk. The first thing the company did was build a butter factory. This was the beginning of a long process of beneficiation of milk into cheese, yoghurt and flavoured drinks and so on, something government types would normally applaud. Except it wasn’t easy because in supplier dominated companies, the incentives are all a bit mixed up. The farmers were really looking for a kind of balancing system to mitigate the huge volatility in the milk price. The milk pri...
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