Friday, March 29, 2024

Holding the hopefuls to account

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Isn’t it about time Fonterra opened up its director election process in some way? For too long media have been excluded from the whistle-stop roadshow meetings where farmers often have their one and only chance to question candidates on their policy platforms and future plans for their co-operative.
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I’ve heard all the arguments about why this needs to be done under a veil of secrecy. I respect the fact that just the shareholders are voting, and candidates, both already in office and hoping to be, have to appeal to only them.  

But politicians only have to do the same with voters, and the media are very much a part of the trial by hustings they choose to put themselves through every three years. By being present the media can alter the tenor of such gatherings from a comfy chat with old friends to a cut-and-thrust exchange about the issues that really matter.

Audiences are sometimes asked “Do you want the in-committee version?” with the promise they will get a serving of something special. Often that’s woefully short of actually being the case. 

Don’t want to air your dirty laundry in public? The answer is simple – if an in-committee restriction won’t suffice close sensitive parts of the meeting to the media. Candidates could speak first, and if necessary farmer questions could be taken after the media had left, if that was more palatable. The issue is particularly pertinent this year when a controversial proposal about reducing board numbers is being put to Fonterra’s annual meeting. 

Wouldn’t it be a good test for each and every one of the candidates to state their position publicly?

I’m led to believe some directors agree with what former directors Greg Gent and Colin Armer are proposing. Would it do any harm for journalists to attend a meeting where farmers could ask all candidates to state their position? Then those shareholders wanting to vote, but not able to get to a meeting, could see who aligned with their views and make their decision accordingly.

Perhaps more important than the responses of sitting directors would be those of candidates stepping forward. Farmers deserve to know their views because, even if the proposal is defeated at this year’s meeting, there’s every chance some permutation of it might reappear in future.

Fonterra seems to have backed itself into a corner over this one. Shortly after the successful Trading Among Farmers vote it unsettled some of its shareholders by launching a review into governance and representation. 

The timing was off, critics said. Shareholders had been through a sustained period of change and they needed things to settle down, and the new structure to be successfully bedded in.

But co-chairs were appointed, consultation begun, input sought from different sources and all options put forward considered. 

So now, it can’t help but be seen as ironic when after the review chairs’ report and recommendations have been received, Fonterra argues the time’s not right to proceed. That begs the question, when is the right time to make such a change? 

Fonterra put forward some valid reasons why the co-op needed to pause before putting anything in front of shareholders. First there was botulinum scare, which led to a large-scale review of processes in the co-op at every level, then two low payout seasons. Fonterra knew it needed to pull out all the stops to make certain of the efficiency of its operations, from shedding staff to advancing interest-free co-op loans, well-appreciated and taken up by many farmers. 

So the delay was understandable. But Fonterra could have given its shareholders some information about what was envisaged in a more direct and planned manner. An indication of a date when any proposed changes would be put in front of them would have been most welcome.

The changes suggested are apparently minor so it’s unlikely any cats would have been let out of any bags. If there were any concerns when it came to full disclosure, which the co-op now operates under, it could have said so and shareholders would have been satisfied with that as they waited. But what appears to be inaction has undoubtedly led to the ball being picked up elsewhere. So the issue, under a different guise altogether, is now very firmly in shareholders’ hands.

When it comes to their consideration of Gent and Armer’s proposal to reduce board numbers from 13 to nine of course there are arguments on both sides. 

Why wouldn’t you want the greatest amount of expertise around the table to be brought to bear on the issues of the day? It’s only logical to allow the necessary time for newcomers to come up to speed. Would it really be in directors’ or shareholders’ interests to have a sudden downsizing of director numbers by election early next year should the proposal succeed?

But, on the other hand, experienced directors and chairmen, such as former Dairy Board marketing manager, John Parker, assert small is beautiful when it comes to concentrating minds and getting the job done. Wouldn’t a small board be more flexible, more suitable for the volatile times in which the co-op operates? That should surely allow the Fonterra Shareholders’ Council to take on much more of the representation role it was designed for, leaving directors to get on with their decision-making.

Without media at a meeting there’s every opportunity for candidates to declare their position then do or say something else entirely. Surely there couldn’t be a better example of an issue where each and every one of them needs to be held to account?

In his last address to a DairyNZ annual meeting retiring chairman, John Luxton, made a welcome point of praising agricultural journalists’ understanding of dairy industry issues. 

Wouldn’t that understanding be further enhanced by them being able to hear, farmer to farmer, exactly what Fonterra candidates have to say?

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