While it was a fascinating insight into how the dairy industry had worked, or more correctly, how it had malfunctioned, before Fonterra’s creation, it was more important as being a point in time where poor business practices were consigned to the past and a much better way of operating was ushered in.
What former New Zealand Dairy Group chief executive, Ross Townshend, described as “turnsies and fairsies” was exposed to the wider world when it was shown clearly the lengths rival dairy companies would go to in order to game the Dairy Board system of different processors making up the products for which it held the sole export license.
There were days of court sittings with the appearances of Fonterra’s former chief executive, Craig Norgate, being eagerly anticipated and not disappointing. The courtroom air just about cracked with the tension between some of the former executives from different companies being forced into such close quarters. Then when a deal was made, lesser charges were admitted, and defendants sentenced it effectively closed a chapter in dairying and exporting.
It’s wonderful that such a warts and all account of the rise of the Dairy Board and its transition to Fonterra has been recorded in Clive Lind’s book Till the Cows Came Home. It should be required reading for not only all those involved with dairying but marketing as well, to fully appreciate the small beginnings from which a mighty export earner grew.
If those were the worst of days, then New Zealand dairying since has undoubtedly been seeing some of the best.
Fonterra has developed in the way that its architects hoped. Some farmers feared this would never happen, not because they didn’t support its creation, but because its bedding down took longer than anticipated. Fonterra’s first failed capital restructuring plan showed clearly the gulf between where some of the directors were happy to go compared with the wishes of many more co-operatively minded farmers.
And international events had a far greater influence than ever before, which no one could have anticipated at the time.
Those who felt hard done by with the United Kingdom entering the European Community, effectively consigning NZ to a special supplier relationship rather than that of a trading partner on equal footing, couldn’t have envisaged the sheer scale of globalisation all of agriculture now has to deal with. This came with international scrutiny, particularly when the San Lu melamine and botulinum scares came along. There’s nowhere to hide, particularly in the age of social media where verification comes a distant second to the instant gratification of spreading information as far and fast as possible.
Getting rid of domestic subsidies in the 1980s was a painful but perfectly reasoned move, allowing NZ agriculture to take on competition from a basis of efficiency of production. But now multinational hands are everywhere as the growth markets in Asia lure those countries so adept at protecting their markets and still in some cases doing so. The answer has to be reliance on and building excellent trading relationships while all the time crafting new ones.
The plethora of small dairy companies which have set up in NZ since 2001 are showing the way here through targeting niche markets with ever-specialised products. Westland and Tatua have forged their own paths, going from strength to strength especially when it comes to expansion, albeit on a much more modest scale than Fonterra. When, in Westland’s case, it comes to competition for milk supply, Fonterra shareholders can perhaps best view this as the ultimate protection against their co-op ever taking their support for granted.
At an organisational level the dairy industry functions much better than it ever did. The bringing together of the former Dexcel and Dairy InSight so that funding and research could be more closely aligned was absolutely the right thing to do. But it made for some heated farmer debate and some re-examination of the onfarm benefits of delivery. These days there’s a close focus on exactly what farmer requirements are and it’s certainly not a case of one size fits all. Southland dairying has its own particular issues just as Northland does, especially now in the midst of yet another flood clean-up. Nothing can take the place of on-the-ground experience and small-scale farmer gatherings complementing research facility open days.
Federated Farmers has upped its act to meet or even surpass the expectations of its members. It seems a very long time ago that it received funding through meat levies while at the same time railing against compulsory unionism – but only 35 years have gone by. It now uses policy analysts to prepare well-reasoned arguments in favour of or opposition to legislative change at national or local government level rather than the country hall meeting tub-thumping of years ago. A great strength has been its ability to mobilise at short notice, whether the campaigns launched were ultimately successful or not. And it’s become less political, recognising there are many issues affecting farmers which can’t be argued on a party political basis.
Now a grouch.
As an Aucklander of more than 25 years’ standing I can’t help but cringe when I hear people living in other parts of the country maintain the city’s population know nothing about farming. Believe me, they know plenty and a lot of what they know they don’t like.
Thanks to Fonterra’s GlobalDairyTrade fortnightly auctions even if these people chose not to have cow’s milk in their lattes (don’t get me started), they realise only too well what a lift or drop of even a percentage point can mean to the NZ economy and therefore to them.
The creation of such a large co-op as well as the spectacular growth of dairy exports has catapulted the industry into every Kiwi’s consciousness, which farmers could chose to view in a different way. What’s the old expression – ‘It’s better to be looked over than overlooked’?
National recognition comes at the price of having your activities examined, dissected, and discussed, sometimes by people with no financial stake in the industry and little more knowledge. But they’re interested, engaged, and want to know more, and that presents a huge opportunity rather than a risk.
They’re not going to stop questioning farming practices. They’re as proud of NZ’s clean, green image as the farmers who maintain it, often with strongly held views about further moves towards intensification of dairying. They’re not all supporters of the Greens, they may or may not eat organic food or shop at farmers’ markets – but they’re serious about having the interests of the whole country at heart.
So after 111 issues, by my count, starting in May 2005, it’s time to move on. I hope, in my new role as editor at large, to be able to get out and about and catch up with farmers more than I’ve been able to sitting at the editor’s desk. A day trip to Waikato or Northland has always been something to be very much looked forward to, and a trip back to where I’m originally from, the South Island, to be savoured.
And rest assured, whatever’s happening in dairying, Dairy Exporter will still be there, just as it has been since 1926.
