Why Fonterra accepted defeat in the dairy aisle
OPINION: Fonterra's sale of its consumer dairy business to Lactalis is a clear sign of the co-operative’s failure to compete in the branded consumer market.
Its new programme The Cooperative Difference will award farmers plaques, certificates and publicity in the co-op’s publications.
However, it isn’t offering extra payments for top quality milk.
Fonterra is also signalling a tougher stance on farmers who persistently fail to meet minimum standards of sustainability.
The co-op says through the new programme it plans to become more sustainable in five key areas: environment, animals, milk, people and communities, and co-op and prosperity.
The new initiative stems from strategy, now being developed by the board and management, that will put sustainability at the heart of everything the co-op does, empowering it to maximise its New Zealand heritage and uniqueness and remain globally competitive.
Full details of The Cooperative Difference programme will be announced at the MyConnect conference in Dunedin next month.
Fonterra cooperative affairs managing director Mike Cronin says sustainability for the co-op is about more than the environment.
“It’s about looking after our people, caring for animals, adapting to changing customer and consumer expectations, and respecting the communities and land where we live and work.
“We are proud of the global reputation Fonterra farmers have for producing high quality milk. Farmers have made tremendous progress onfarm to date and The Co-operative Difference will help us take that good work to the next level so we can continue to create goodness for generations to come.”
For milk suppliers, a clearer edition of the co-op’s Terms of Supply and Farmers’ Handbook will be delivered in time for the 2019-20 season, outlining the minimum requirements onfarm.
“We will streamline processes for managing non-compliance and ensure farmers are adequately supported in minor non-compliance issues,” the co-op says.
The existing demerit scheme for milk quality issues, the liquidated damages regime and a number of issue-specific consequences for failing to meet required standards will remain in place.
“The co-op will take a firmer line with [farmers who] persistently fail to meet minimum standards, ultimately suspending collection when justified,” it says.
Cronin says consumers and customers increasingly want to know that their food choices support a sustainable future.
“How we farm and make our products needs to reflect these aspirations so we can remain a globally competitive NZ cooperative,” he said.
“Our cooperative’s strong dairy heritage and pasture-based system separates us from the pack, but we must continue to earn our customers’ and consumers’ trust and loyalty,” says Cronin.
Making a difference
The Cooperative Difference will support Fonterra’s new strategy by:
- Recognising farmers who go beyond the minimum requirements to supply high-quality milk, care for their animals, protect the environment, support their people and community, and engage in their co-operative
- Helping other farmers follow suit by making existing onfarm requirements easier to understand and by providing tailored, industry-leading support services to those who want to improve
- Providing more information and advance notice to farmers about the co-op’s aspirations so they can plan and progress towards shared ambitions
- Streamlining reporting and auditing to save farmers time and energy, and help the co-op protect its market position, strengthen its sustainability claims and drive demand for products that customers and consumers value most
- Supporting farmers wanting to improve, while taking a firmer line with those who persistently fail to meet minimum standards, and exercising our rights to suspend collection.
