“I have to go and look for it to make my own decisions,” he said.
He believes Fonterra should be communicating better with shareholders to force upskilling and to empower them counter the 50% who often voted on an emotional basis.
“Give them reasons to hope.”
He was concerned the board and management felt constrained in the information they supplied because of worries about the Financial Markets Authority
The impending review of Fonterra’s structure was welcome but he said job losses at its head office were unlikely to make much difference to its farmers.
“It takes $14 million on the bottom line to shift the payout by one cent,” he said.
“Taking hundreds out of the head office isn’t going to make too much difference.”
He believed Fonterra should have responded to criticism from large scale farmer and former Fonterra director candidate Trevor Hamilton, who said Trading Among Farmers (TAF) had transferred risk to farmers, so some had opted to cash in shares and move to supply other companies (Farmers’ Weekly, May 18).
“I am looking for the warm, cuddly blanket of the co-operative wrapping round me, saying Trevor Hamilton is wrong,” he said.
“It’s death by a thousand cuts. We only hear about Hamilton’s concerns and people wanting to leave rather than the benefits of a strong co-op.”
He said as Fonterra had grown larger it had adjusted its rules to allow more flexibility.
“We’re not all marching to the same step,” he said.
He believed MyMilk, where Fonterra has attracted non-shared milk supply in the South Island, was “a brilliant concept”.
“It’s good for the established farmer in the Waikato because it forces Synlait and Westland to match that position,” he said.
“It’s set a floor price which everyone has to play to and it protects Fonterra against stranded assets.”
“I am looking for the warm, cuddly blanket of the co-operative wrapping round me, saying Trevor Hamilton is wrong.”
Neil McLean
Waikato
He was disappointed the co-op hadn’t countered shareholder questioning about where the benefits were to them from the scheme, saying in four years out of five they should receive a higher payout because of the extra milk attracted.
He believed the present Dairy Industry Restructuring Act requirements that Fonterra supply milk to small start-up companies would last for only the next 18 months or two years.
The co-op had to be big in the world in order to make an impact, and needed 1% milk growth annually “or else we’re irrelevant to the market”.
But in order to achieve a return of 7% it would have to double its commodity trade every 10 years, McLean said.
TAF was delivering what it should but the problem was there was no money in added-value products when the market was over-supplied. While it was unrealistic to think there could be a 20% return from added-value products, pursuing this strategy had many advantages.
“It helps get deeper into supply lines to smooth out the tonnages going into markets,” he said.
That could help remove some price volatility and avoid recent situations such as where Fonterra was cut out of the Sri Lankan market for political reasons.
He believed its GlobalDairyTrade auctions were Fonterra’s most valuable brand and a move to weekly events was the next logical step.
