Thursday, 07 May 2020 09:54

Co-op dilemma — Editorial

Written by  Staff Reporters
Fonterra farmers, from left, Jim Cotman, Trevor Simpson and Malcolm Lumsden want the Shareholders Council scrapped. Fonterra farmers, from left, Jim Cotman, Trevor Simpson and Malcolm Lumsden want the Shareholders Council scrapped.

OPINION: Tension's been simmering among Fonterra shareholders for some time.

Read: A group of Fonterra farmers want the Shareholders Council scrapped.

Some are unhappy with the co-op’s financial performance over the past two years, others are frustrated with the lack of information coming from the board of directors.

A group of shareholders are also venting their anger at the Fonterra Shareholders Council, a 25-member elected body tasked with the role of “representing the views of all shareholders as suppliers, owners and investors”.

It also meets regularly with Fonterra’s board and management to discuss the co-op’s performance.

Two years ago Fonterra shareholders were stunned to learn that their co-op had recorded its first ever net loss after tax of $196 million for the 2017-18 year.

What didn’t help either was confirmation that former chief executive Theo Spierings left with a final year’s salary of $8 million the same year.

Then things got worse. The following financial year, Fonterra posted a net loss of $605 million on the back of asset writedowns worth $826m, mainly on its offshore businesses.

Shareholders like Trevor Simpson, Jim Cotman, Mark Lumsden and Mike Peters of Waikato have had enough.

For them there must be a better and more efficient way for shareholders to keep a tab on their co-op’s performance.

The nasty surprises delivered by the board and management in 2018 and 2019 financial year must end.

Simpson and his group want the council to step up. That’s why the review of the council is crucial for the co-op and its 10,000 shareholders.

They want the council scrapped. Others may not be keen to go that far. But what’s certain is that things must change.

Right now the council has no say in how the co-op is run and the investments it makes both here and overseas.

The council reviews the performance of Fonterra’s investments years after millions of dollars have been poured into dud projects, like China Farms and Beingmate.

Therefore, it’s unfair to blame the council for Fonterra’s investment failures: accountability rests with the board and management.

But Fonterra directors’ hands are tired when it comes to talking directly to shareholders. NZX disclosure requirements means the co-op must deal carefully with market-sensitive information. This is the dilemma facing Fonterra. Trading Among Farmers (TAF) has broken the open and free-flowing communication link between shareholders and directors.

How can this link be restored? Will scrapping the council be enough?

These are the questions shareholders will ponder as they mull the future make-up of the council in the coming months.

More like this

Driving change within Fonterra fleet

Today is International Women’s Day, and this year Fonterra wants to shine a light on the women who defy stereotypes and prosper in traditionally male-dominated fields. Erin Wootten, a tanker operator out of the Fonterra Reparoa Site, is doing just that.

Co-op decarbonisation leader's Antarctic trip

At the beginning of November 2023, Linda Mulvihill, Fonterra’s general manager energy & climate, flew to Ushuaia, Argentina, where she boarded a ship and began a 19-day voyage to Antarctica.

Featured

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 possible.

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 for their products.

Alliance's Pure South cuts win gold

Meat co-operative Alliance Group has bagged four gold medals at the Outstanding NZ Food Producer Awards, achieving top honours for every cut entered.

Dairy demand on the rise

There is increasing evidence that dairy demand is on the upswing, according to Rabobank senior agricultural analyst Emma Higgins.

Fert use tumbles as prices spike

Fertiliser use in New Zealand over the 18 months is about 25% down from what it consistently was for the previous decade or more, says Ravensdown chief operating officer Mike Whitty.

National

Waikato dryer sold

An independent milk spray dryer in Hamilton, destined for liquidation, has been bought by a South Auckland goat milk processor.

Machinery & Products

Samasz sets its sights high

Since its arrival in New Zealand, Polish mower manufacturer Samasz, currently celebrating 40 years in business, has carved a niche…

Trojan keeps on going

The DR200 Trojan farm two-wheeler motorcycle was introduced over 28 years ago, when the engineering team at Suzuki New Zealand…

Still going strong!

The saying goes ‘if it ain’t broke -don’t fix it’, so it’s no surprise to see an old favourite in…

» Latest Print Issues Online

Milking It

'A complete dog

OPINION: It's not just a rural banking inquiry that farmers want. Freshwater farm plans are another major headache for farmers.

Action, not words

OPINION: The new Government may be farmer friendly, but it's not love, rather action that farmers want.

» Connect with Dairy News

» eNewsletter

Subscribe to our weekly newsletter