Council chairman Ian Brown said shareholders would rightfully feel disappointed that, in particular, an increase in dividend was not delivered.
He was introducing the FSC April report to all shareholders, one of four written reports a year.
He said farmers had invested significantly in Fonterra with the expectation of a lift in profit.
“This is especially relevant in a low milk-price environment.
“The council has been very clear with the board that Fonterra’s performance is not acceptable and needs to improve and provide farmer-shareholders with a return more relevant to their investment in the co-op.
Brown said a performance committee of the council would continue to meet Fonterra to understand the reasons for the results and its strategy to improve on them.
Meanwhile, former councillor and Central Hawke’s Bay dairy farmer Sarah von Dadelszen expressed widespread frustration among dairy farmers at both the low milk price and reduced dividend.
A low payout with a low dividend was completely unacceptable to farmer-shareholders.
“The council has been very clear with the board that Fonterra’s performance is not acceptable.”
Ian Brown
Fonterra Shareholders Council
“This growth strategy seems to have got out of control.
“We either accept we are a commodity player and strip out all the costs, like farmers have to do, or go for gold on strategy and start performing or heads will have to roll.”
Von Dadelszen said she was a staunch co-operatives supporter and a recently elected director of Ballance Agri-Nutrients but she did have concerns when co-ops departed from the model, as Silver Fern Farms had done.
“Fonterra still has a strong co-op model that I passionately believe in but will it deliver on the value-add strategy, that’s another matter.
“I don’t blame them for the low milk price because that is the vagaries of the international market.
“But the dividend going down at the same time, that is what farmers are annoyed about.”
Fonterra’s growth strategy seems to have got out of control, former Shareholders Councillor Sarah von Dadelszen says.
To the credit of Fonterra directors and chairman John Wilson they had been going around the country explaining what was happening to meetings of farmers.
“That’s another strength of the Fonterra structure.”
Over the next few weeks Farmers Weekly will focus a series of stories on Fonterra and ask farmers, economists and industry commentators their views on the performance of the world’s biggest milk exporter.
You can have your say as well. Visit sharingshed.agriHQ.co.nz and tell us your thoughts.
Try the AgriHQ dairy tools at agrihq.co.nz/toolbox
