Friday, March 29, 2024

Silence steps up scrutiny

Avatar photo
What might have been?
Reading Time: 3 minutes

That’s what Fonterra farmers are sure to be pondering as they front up to gatherings around the country then vote at a special meeting on proposed changes to Fonterra’s governance.

The recommendations result from a review that kicked off in 2013.

While farmers didn’t doubt the intention some were damning of the timing. Trading Among Farmers (TAF) had not long been voted in after a divisive and sometimes openly acrimonious debate. Why stir things up all over again, many asked?

But the payout was high, the industry was on a roll and many farmers had other things on their minds, such as onfarm intensification designed to take advantage of it all.

The review committee did its job and reported back to Fonterra but that’s where the delays began.

August 2013 saw the WPC80 botulinum scare then in November 2014 the 1080 blackmail threat.

They were completely valid reasons for Fonterra’s board to push governance down the list of things to do. But the big mistake the co-op made wasn’t adequately communicating with its farmers about exactly what was happening.

There should have been plenty of opportunity at small-scale dairy meetings or networker events to make it clear that proposals for change would still be coming forward for farmer vote.

That reassurance given, there could have even been hints at what might be on the drawing board for farmers to mull over well ahead of time.

And the public could have been assured as obliquely as necessary that progress was being made and farmers would have the final say.

But instead there was a surprising silence, which earned the wrath of those involved in the review from its inception.

They can easily be excused for thinking at that stage that all their hard work and consultation might end up discarded without their fellow farmers ever sighting it for feedback.

Former directors Greg Gent and Colin Armer did their co-op a great service last year, putting up a resolution to the annual meeting to reduce board numbers, which effectively dragged the governance review off the back burner.

But again, had Fonterra taken charge of the matter at an earlier stage the whole debate, which again opened up distracting divisions, need not have happened.

With shareholders’ full knowledge, proposals could have been put forward and voted on at the 2014 annual meeting in Palmerston North.

WPC80 reviews and inquiries were well under way if not completed and acted on by then.

Jeremy Hamish Kerr’s letters containing milk powder laced with 1080 poison hadn’t yet been sent to Fonterra and Federated Farmers and were not to become public until early the next year.

There was a window of opportunity to put governance issues out for farmer consideration in a timely and efficient manner.

And, as has been seen with the review proposals now released, there was always the chance to separate these changes from representation issues to do with the structure, make-up and role of the Fonterra Shareholders’ Council (FSC).

If these issues were likely to take time to resolve farmers would surely have given Fonterra the space it needed, based on the fact that one of the most urgent considerations is the low level of farmer involvement in ward elections, when they do occur.

The bigger problem, well highlighted and to be brought into focus next year, is the lack of candidates for FSC positions.

One very positive thing to come out of the review recommendations is Fonterra’s own assertion that its communication needs improvement. Farmers are sure to applaud the proposal to publish the interface document which explains the working relationship between the Fonterra board and the FSC on its website.

It should, as the review suggests, build trust among farmers if they’re able to make their own judgment on whether the two groups are functioning as they should, instead of just relying on the say-so of members of either group as happens now.

Many others outside the co-op feel entitled to have an opinion on the dairy giant because of the importance it plays in the national economy and the political process which gave it life in the first place.

Back in 2013-14 the dairy industry certainly wasn’t under the scrutiny it is now, with mutterings of a fourth low payout in a row and all that means nationally with a worsening farmer debt position. Much of the comment and criticism, well informed as well as not so, comes from right outside of farmer ranks.

Already a large and easy target as New Zealand largest company, with a new and much more visible Auckland headquarters, the interest level is only going to grow. The ructions over supplier payments are just a taster.

If its house had been put in order in the good times, how much more strongly could Fonterra and all its farmers be countering much of the present criticism?

Total
0
Shares
People are also reading