Friday, March 29, 2024

Editorial – Skills the key to the future

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Fonterra has delivered its draft proposal on governance and its farmer shareholders will now decide whether it conforms with their plans for the co-operative’s future. Last year’s Armer-Gent remit to reduce the size of Fonterra’s board was voted down but the leadership rightly saw there was an appetite for change and so the governance review was kicked off.
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The chief recommendation in this document released last week is the proposal to reduce the size of the board from 13 to 11 while maintaining a majority of farmer representatives.

That will appease those who said the board had become cumbersome and out of step with similarly-sized organisations.

But the key note in all of these musical chairs is the skills each member brings to the board.

Fonterra is farmer owned and so it is right it should be controlled by those farmers.

Producing milk is what farmers do and Fonterra farmers do that better than most. What the co-operative needs to improve is how it transforms that milk into products the rest of the world wants to buy.

That knowledge probably won’t come from a farmer but rather from someone with experience in food technology or marketing or international trade. Getting those ideas around the table is a must if Fonterra wants to find harmony.

The draft report proposes changes will be made to what defines a farmer – with corporate farmers the obvious target. That might help diversify the talent at the board table.

There are many experienced business-people with a finger in a few pies, including dairy farms, and that big picture view could be an asset.

Whether cup-slinging dairy farmers will take to being represented on the board by someone who hasn’t pulled on the gumboots since the 1980s is yet to be seen.

We’ll find in May, when the draft is voted on.

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