But PGG Wrightson chairman Craig Norgate is promising to use his position to initiate change in the industry, saying he would be happy to discuss a merger between the two co-operatives, Silver Fern Farms and Alliance Group.
"Silver Fern Farms with us, around the table - we would be a very willing party."
Mr Norgate said PGG Wrightson's involvement could remove animosity between the two co-operatives and was willing to change the level of ownership if that was needed to initiate change.
Loss of control has in the past prevented co-operatives from sourcing outside capital, most noticeably Fonterra's failure to publicly list part of its dairy processing business.
Mr Norgate said that failed because Fonterra could not tell farmers what it would pay for milk.
ABN Amro Craigs broker Peter McIntyre said farmers liked to control their own destiny, but the perilous state of the meat industry and the benefits from $220 million in capital could prove decisive for Silver Fern Farm's (SFF) farmer-shareholders voting whether to vote to accept or reject PGG Wrightson's offer.
Financial markets and farmers were yesterday generally positive about the proposal.
Federated Farmers Meat and fibre section chairman Bruce Wills said the move could be a catalyst for change, but farmers had to decide if they were happy to lose full ownership for that to happen.
Meat Industry Action Group deputy chairman John Gregan agreed, saying diluted ownership was a high price for farmers to pay if the deal did not result in industry consolidation.
"If all that is going to happen is the industry carries on [unchanged], then it is a lost opportunity and loss of ground.
"If it is a conduit for further consolidation, then maybe we have to accept some loss of farmer control."
SFF chairman Eoin Garden said farmers were not losing control, as it was in the interests of SFF and PGG Wrightson to have a strong, growing company.
"Their interest is in the company being profitable and that requires farmer support and stock," Mr Garden said.
He said PGG Wrightson's investment had doubled the size of the business for which the stock firm had bought half.
Shareholders would still have the chance to participate in the rebate scheme and elect directors, but the governance structure was more suited to modern business, he said.
Mr Garden said SFF was taking the meat industry in a new direction and away from the traditional supply patterns which were governed by grass growth, meaning most stock was supplied from December to May.
Meat companies have been looking for new lamb markets away from European and United Kingdom markets and to reposition lamb as a high-value niche product, but these new markets wanted a year-round supply of lamb.
Under the deal, SFF will outsource farm input, production services and stock procurement to PGG Wrightson with 100 SFF stock drafters to be integrated into PGG Wrightson's 280 field staff.
SFF will manage logistics, processing, marketing and branding, in a deal being described as an integrated supply chain.
"The main obstacle currently preventing the industry from taking full advantage of this opportunity is lack of co-ordination along the full length of the supply chain, from plate to pasture.
"There is little scope for processors to influence on-farm practices, and this production of consumer-specific animals," according to a white paper released on the subject.
Mr Garden said that initial farmer reaction had been positive and he was confident it would get the required support.
