Tuesday, 24 November 2015 10:17

Co-op at crossroads

Written by  Sudesh Kissun
The remit, moved by former directors Greg Gent and Colin Armer, calls for a nine-member board – six elected and three appointed directors. The remit, moved by former directors Greg Gent and Colin Armer, calls for a nine-member board – six elected and three appointed directors.

Fonterra shareholders will be watching hawk-eyed this week's annual general meeting in Waitoa.

They will be keen to note the reception given the remit is calling for a cut in the number of directors.

The remit, moved by former directors Greg Gent and Colin Armer, calls for a nine-member board – six elected and three appointed directors.

A 75% 'yes' vote is widely expected to be out of reach, however it is possible the remit could garner 50% support. This would throw the co-op's governance in turmoil.

The remit has exposed a divide in Fonterra – a division among directors and shareholders. During the 14 years since Fonterra's formation, the days of Kiwi Co-op and Dairy Group politics may have been forgotten. But farmers feel that not all is forgiven.

When the chairmanship changed in 2012, it was a close contest. Armer missed out by one vote and resigned; some farmers believe he is seeking vengeance. Gent also missed getting the chair when Fonterra was formed; he was chairman of Kiwi Co-op and Henry van der Heyden, as chairman of Dairy Group, got the nod.

Gent served as vice-chairman but never held the top job and retired in 2011. Some farmer-shareholders feel these two men have chosen this era of dairy downturn to put the boot into their co-op. But some agree with Gent and Armer that Fonterra looks in a bit of a bind in several ways. And time is running out for the co-op to sort out its woes.

Does the answer lie in altering the board? This means there will be wholesale change to management also.

And if the number of directors were to be reduced – which probably makes sense – then the way Fonterra shareholders elect directors would need to change.

One shareholder commented on the 'raffle' by which the shareholders now struggle to get quality at the board table. The gloomy fact is that 10,500 farmers geographically far-flung across the country haven't much hope of accurately assessing who are the best candidates. Also, many – probably most – shareholders know very little about the skills, experience and character needed in directors charged with running their co-op – the world's biggest dairy exporter!

This prompts the question whether Fonterra's director election system needs an overhaul. The candidate assessment panel, whose job is to advise farmers on the qualities of each candidate, should also be up for review.

But before these questions can be dealt with, there's the 'small' matter of dealing this week with this resolution.

More like this

Editorial: Passage to India

OPINION: Even before the National-led coalition came into power, India was very much at the fore of its trade agenda.

Fonterra posts solid results

Fonterra has delivered a solid half-year result, thanks to higher margins and sales volumes across the co-op's diversified product and category mix.

Featured

Sheep drench resistance costly

Analysis by Dunedin-based Techion New Zealand shows the cost of undetected drench resistance in sheep has exploded to an estimated $98 million a year.

Dairy sheep and goat turmoil

Dairy sheep and goat farmers are being told to reduce milk supply as processors face a slump in global demand for their products.

Hurry up and slow down!

OPINION: We have good friends from way back who had lived in one of our major cities for many years.

National

Govt urged to reduce ETS units

The Climate Change Commission wants the new Government to reduce NZ Emissions Trading Scheme (ETS) auction volumes as son as…

Dairy sheep, goat woes mount

Dairy sheep and goat farmers are being told to reduce milk supply as processors face a slump in global demand…

Machinery & Products

All-terrain fert spreading mode

Effluent specialists the Samson Group have developed a new double unloading system to help optimise uphill and downhill organic fertiliser…

Can-Am showcases range

Based on industry data collected by the Motor Industry Association, Can-Am is the number one side-by-side manufacturer in New Zealand.

» Latest Print Issues Online

Milking It

Papal visit

OPINION: European farmers are going to extreme lengths to have their message heard.

Thai egg tarts

OPINION: The hustle and bustle of one of Bangkok's most popular fast food outlets may feel a world away from…

» Connect with Dairy News

» eNewsletter

Subscribe to our weekly newsletter