Friday, March 29, 2024

Farmers react to Fonterra AGM

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Fonterra shareholders showed when voting for directors that actions speak louder than words, Waipu, Northland, dairy farmer Stuart Abercrombie says.
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“Nothing against previous directors as people or their skills but the voters showed they were not happy with what happened last financial year.

“Farmers lost confidence in what the directors did or didn’t do and the election results showed that.”

Abercrombie isn’t happy another election is now required and somewhat disappointed the apparently well-qualified and potentially valuable Maori farming leader Jamie Tuuta missed out.

“I think it also showed that the whole election process wasn’t as open and transparent as farmers would want it to be.

“The idea of the selection panel, it seems to me, is to get candidates who will add skills in areas we are lacking.

“We get sent profiles of candidates in their own words but no results of the skills assessments or psychological testing that the independent selection panel must have carried out.”

Abercrombie said the Fonterra Shareholders’ Council annual report and the Value Creation report are indicators the council isn’t getting enough handle on company affairs to make sound comments to farmers and feedback to directors.

New chief executive Miles Hurrell seems confident in his ability to deliver the debt and operating cost reductions along with the 25-35c/share earnings prediction.

“But in cutting debt and expenses he must have in mind the strategy of Fonterra and not just throw assets into a fire sale.

“I don’t want them just to be consolidating by fire sale – they have to be adding value all round the world.

“So senior managers need to be working on all aspects of the business at any one time, in order to justify their high salaries.”

Geoff McLennan

Geoff McLennan still wants assurance Fonterra’s culture has changed, which he believes is the root cause of the co-operative’s financial problems. 

The Otago dairy farmer and Fonterra shareholder supported previously announced plans by the board and managers to address its declining financial performance but said shareholders still need answers on how poor investment decisions were made.

They want assurance the culture at management and board level has changed so poor-performing investments such as China Farms and Beingmate will not be repeated. 

Much of the board’s plans to address its problems were announced before the annual meeting and McLennan says little new emerged.

He views the election of Leonie Guiney and failure of incumbent director Ashley Waugh as a shareholder backlash against the direction the co-operative was taking.  

McLennan welcomed the report by the Fonterra Shareholder’s Council that delivered a sobering financial analysis, saying it unearthed what many shareholders feared and by not holding back the council proved it is more than a rubber-stamping body.

“The Shareholders’ Council has been under a fair bit of comment that they are trying to get on the board by sanctioning board and management decisions rather than articulating what shareholders want them to do.”

Its report backed up shareholder concerns and showed the policy of growing milk supply is locking Fonterra as a producer of commodity products.

McLennan hopes Fonterra’s new leadership will act quickly on its plans saying the co-operative’s poor financial performance is eroding share value and contributing to weaker land prices.

“Shareholders need quick results and a quick turnaround.”

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