THE LATEST media beat-up on Fonterra’s fresh cream recall cannot go unchallenged.
Everyone, from opposition politicians to a handful of Fonterra’s 10,500 shareholders, has jumped on the bandwagon to bag the dairy co-op. One unsuccessful Fonterra board candidate went as far as calling for board chairman John Wilson to resign.
And all because the co-op voluntarily recalled 8,700 bottles of fresh cream from North Island retail and foodservice outlets. The recall was triggered by quality tests showing there may be the presence of E.coli in some Anchor and Pam’s bottles of cream.
To put this in context, Fonterra produces around 17 million bottles of fresh cream annually in New Zealand. It is recalling fewer than 9000 bottles or about 0.05% of its annual production. In New Zealand there are 100 voluntary food recalls and withdrawals every month. But no other food producer faces this scrutiny from the media and politicians.
We don’t condone the presence of E.coli or any other bacteria in our food products. The bottom line is that all our food products must be safe and of top quality. But let’s give credit where its due – Fonterra has acted decisively in recalling the products.
One would expect the co-op to have learned its lessons from the botulism fiasco. It should have processes in place to manage consumer fallout and should in time shake off any perception issues about its food safety record.
The investigation into the alleged contamination is continuing and everyone will be eagerly waiting to see how this happened. For overseas consumers, still recovering from the false botulism scare and its impact on infant formula trade, publicity around the cream recall will cause some concern.
However, the fresh cream recall is a domestic issue for Fonterra’s brands business. Food recalls come with being a major player in the FMCG (fast moving consumer goods) sector.
Using every minor food safety issue at Fonterra to humiliate the co-op is plain wrong. And using the minor food recall to push political agendas is worse.
The cream recall is a minor issue, but as a global food exporter, Fonterra knows the stakes are high in the international market. The co-op is now operating under scrutiny both at home and abroad.

Another year has passed, yet another busy one for the agribusiness sector. Rural News’ editorial team reviews the 2013 year and its highs and lows…
Bad
‘KICK EM in the guts Trev’ award: AgResearch for the way it handled its relocation strategy. Another crop of good scientists gets dumped on and New Zealand loses again. While the CRI may have a point with its relocation strategy, it seems to many that the company is more interested in paying dividends to the Government than serving farmers’ needs.
‘Missing in action’ award: John Wilson, Fonterra chairman. Happy to front new milk in schools programmes, but he went into hiding when the proverbial hit the fan at Fonterra during the botulism botch-up.
Biggest loser of the year: Gary Romano, after he walked (voluntarily or not) the plank following Fonterra’s botulism saga. Second biggest: New Zealand – or was it the biggest?
Biggest botch-up of the year and the people’s choice: Fonterra for botulism botch-up or was it notulism? Inept in every way, from the first sign of trouble to the appalling communication of the crisis at all levels of the organisation.
Second biggest botch-up: MPI for not changing the old MAF paperwork for meat exports to China. Meat sat on wharves for weeks and exporters lost money while authorities haggled over an acronym. A ‘high performing department’? Yeah right! Not high and not performing. Oh, and what’s in our PKE? A sheep’s foot, a deer’s hoof or a fish?
Worst PR effort in the rural sector: MPI by a country mile. They never failed to underperform. The struggling government department even spent $250,000 on buying-in spin doctors from outside, to no avail! Can anything be ‘Dunne’ about this?
Fonterra is at least trying to change its ways, but still has a fair way to go.
Good
Biggest turnaround: the kiwifruit industry, from survival to revival in the face of Psa destruction.
Best score: Dairy Women’s Network again for attracting DeLaval NZ’s managing director Zelda de Villiers as its new chief executive.
Grace under fire: Nutricia ANZ managing director Corine Tap, facing hysterical mums and massive product recall; but none of it was her fault.
Leading the way: Miraka for notching up a deal with the Chinese this year, while Fonterra was busy apologising to them for its numerous cock-ups.
Top lobbiest: HortNZ who got more dogs, more X ray machines, better biosecurity. Also ran a great conference and vastly improved its relationships with central government.
Runner-up: MIE for trying hard to get reforms in the meat industry. Harder than herding cats.
Politician of the year: Amy Adams for driving the RMA and water reforms and putting regional government on notice for some sub-optimal performance. A very smart politician.
Trying hard award: Nathan Guy for doing his best – despite taking advice from a department (MPI) that has been restructured so many times that too many good people have gone.
Runner-up: Damien O’Connor who did his best despite belonging to a party more interested in the rights of gays than the primary export sector. Right guy, wrong party.
Farming leader: hard to go past Bruce Wills who has turned Feds from a feral, grumpy lobby group to one respected nationwide especially on environmental issues.
Agribusiness person of the year: Kingi Smiler continues to impress by his leadership in Maori agribusiness. Others to watch are Gerard Hickey of Firstlight Foods and Dion Tuuta of PKW.
Ag event of the year: hard to beat the Ahuwhenua Awards for the top Maori farmer. Attracting 850 people to an amazing gala dinner is pretty impressive.
Young person: Lincoln University undergraduate Brigitte Ravera for her brilliant endorsement of the opportunities agriculture offers young people, spoken during a bus tour organised for teachers and careers advisors. The other young people on the bus were equally impressive.
Best PR in rural sector: Feds, if you base it on the number of media releases and their willingness to front people. DairyNZ, Rural Women NZ and Massey University are also very much up there.
Best communication of science: Massey and Lincoln universities and DairyNZ. Always willing to help the media and farmers and innovative in the way they communicate. MPI take note!
Ugly
Knockers of the year: Fish and Game and Massey University’s Mike Joy who seem to forget that moaning in the media doesn’t earn export dollars, nor does it help our export sector.
Greatest hysteria: anti-PKE groups using some media to foulmouth the key supplement feed in the dairy sector. MPI reacts by agreeing on greater screening of PKE.
Idiots of the year: the small minority of dairy farmers who continued to pollute waterways and failed to respect the environment, so tainting New Zealand’s image. It’s time Fonterra and other dairy companies made them walk the plank (a la Gary Romano).
Greatest challenges for 2014: getting unity in the meat industry, making MPI a high performing government department, stopping Mike Joy and his green mob from badmouthing farming, encouraging young people to make a career in agribusiness, and getting Fonterra’s John Wilson to front the bad as well as the good news .
A bouquet: to the big majority of farmers who have met their environmental obligations.
If only
Dr Mike Joy would say one good thing about dairying farming.
Nathan Guy would stop referring to MPI as being a “high performing government department” until it is.
Fish and Game would accept they are not environmentalists; they’re there only to kill and catch fish.
Fonterra would fire some ‘feral’ dairy farmers.
The CRI’s would do some serious ‘technology transfer’ and have regular interactive sessions with farmers.
The meat industry would unite and farmers would fully support that.
Someone would take a real leadership role in the primary sector.
MPI would stop referring to Maori as “having potential”. Maori are already performing well and, yes, they have potential, but so do many non-Maori farmers.

THE DEBATE over foreign investment in agriculture is clouded in politics, ambition and fear. It polarises farmers, political parties, investors and the community.

Yet foreign investment in New Zealand agriculture has been a reality for decades. In fact, New Zealand agriculture was founded on foreign investment.

With former Labour leader and trade minster Phil Goff recently pulling his Rural Land Sales Bill from the parliamentary private members ballot, we are going to hear this issue debated again.

Many in the farming sector may sympathise with the populist intent of Goff’s bill, but they should be careful what they wish for.  Are they saying a farmer who owns the land does not have the right to sell it to the highest bidder, if that happens to be a foreigner? That has severe connotations for his business, income and retirement.

Farmers create income for the country by producing products better than anyone else and allowing that produce to be sold to the world for high prices. Are we now saying New Zealand-produced milk, meat, fruit and wine should not be sold to these overseas buyers because it makes prices to locals too high?

No doubt Goff’s bill will garner support from the xenophobes in NZ First, the economic isolationists in the Greens and the populists in Labour.  Supporters of this bill will claim it is intended to protect New Zealand for New Zealanders, but in reality it is simple dog-whistle politics.

It’s not really about foreign ownership, it’s about Asian ownership. However, the real foreign land owners in this country ironically aren’t Asian – they’re Brits and Australians. Look at the media coverage of the Shanghai Pengxin purchase of the Crafar farms, compared to that of Hollywood director James Cameron buying his growing swath of land in Wairarapa.

What’s the difference? Both are foreign owners. They can’t take the land back to their home countries. They are employing New Zealanders, buying New Zealand inputs and investing back into New Zealand.  Surely this is all good for our economy?

New Zealand is a player in the global market and a strong proponent of free trade. Is it not more than a little ironic – even hypocritical – that the great free trader now wants to restrict who we will sell our farmland to? We can’t expect to play in a global market with free trade deals and open access if we’re going to slam the door on foreign investment.

Minister for Primary Industries Nathan Guy wants to see a doubling of New Zealand’s primary exports to $60 billion by the year 2025.
Even Guy, himself, concedes this is going to be “a challenge”. As he admits – it is good to have something to aim for.
Guy has reiterated his aim to double New Zealand primary exports a number of times since taking over as Minister back in February. It is also now a stated target of the Ministry for Primary Industries.
But just how realistic is such a lofty goal and how will it be achieved?
According to Guy, the Primary Growth Partnerships (PGP) will be a big part of it. He says over the next seven years, some $650 million will be invested into PGPs – with government meeting 50% and industry putting up the rest.
“What we know is if all these returns are realised from the PGP, it is worth about $7 billion,” he claims. “Each $1 investment – half from industry and half from government – will return about $11 over about seven years.”
Impressive returns if these can be realised!
And speaking of unrealised potential, another of Guy’s aims is to unlock Maori agribusiness capacity in this country. He believes this is possibly worth about $8 billion annually to our economy, according to a recent MPI report.
As an example, Guy cites a small project where soil analysis was done on 240ha of Maori land, which showed some major opportunities for Manuka honey that is very lucrative in China. He says Maori agribusiness has an opportunity to use the New Zealand story for marketing, and work is being done on this by New Zealand Trade and Enterprise, Foreign Affairs and MPI.
We have already seen what a potential powerhouse Maori agribusiness could be in the sector via things such as the Ahuwhenua Trophy competition and businesses like Miraka.
$8.8 million has been awarded to the Sustainable Farming Fund for a number of projects that will eventually lift productivity as well, Guy says.
“We know if we can lift the average New Zealand farmers into the top quarter then that’s worth about $3 billion in exports a year. A 1% productivity gain by New Zealand farmers is worth about $4 billion in exports a year. There are huge opportunities…. That links into the Lincoln hub and why we made that announcement, because we believe we can get much greater synergies from having the 900 best scientists in one place working together… fewer silos, more collaboration. There’s early indication the private sector is keen to come in there as well.
“So it’s important when you look at the growth of dairying to have a strong campus in the middle of the South Island. Lincoln University historically has done well and we wanted to ensure its future and viability.
“The important thing to lift productivity will be capability and skills and that’s where the Lincoln hub, Massey and the ITOs like Taratahi play an important role in making sure we can attract our youngest and brightest to primary industries.”

WELL DONE to Rural Women NZ and Federated Farmers for fighting hard to ensure New Zealand Post continues posting mail in rural boxes five days a week for the next few years.

Kudos must also go to the Government and NZ Post for keeping this part of NZ Post’s deed of understanding in place and rightly recognising that rural New Zealand is different.

However, what is most disappointing are the ill-conceived claims – typically in some urban media – that this decision is evidence of the Government playing favourites with its rural base.  It shows that the oft-mentioned rural-urban divide still has a way to go before it is bridged.

As no doubt both Feds and RWNZ argued, when lobbying for the maintenance of the current mail service to the rural sector, rural customers are unique when it comes to connectivity. Their remoteness prevents them from popping down to the doctor, trade store or shop to pick up what they need.

And despite the spread of the new technology, many in rural areas are either not connected to the internet or must still survive on a slow, dial-up service.

According to Statistics NZ, about 78% of rural households had access to the internet in 2012.  As mentioned, dial-up is a reality in the hinterland. Even when the Rural Broadband Initiative (RBI) is completed in 2017, only 86% of rural households will have access to it.  It’s estimated that some 80,000 rural New Zealanders will still be without high-speed internet access. That makes it very hard to do simple business things like paying a bill online, internet banking and accessing electronic information.

As Fed Farmers has rightly claimed, “rural delivery is a lifeline that right now they cannot afford to lose”. Or as RWNZ submitted, “rural post is a wraparound distribution service that is part of the fabric that holds rural communities together”.

With NZ Post’s deed to be reviewed again in 2020, hopefully the rollout of ultra-fast broadband will by then have gone further in rural areas. Until then, it is only fair rural NZ keeps its lifeline to the rest of the country via a five-day-a-week mail delivery service.

IT’S TIME for small dairy infant formula exporters to get over it.

It’s almost three months since Fonterra’s false botulism scare hit the headlines, but the small exporters are beginning to sound like an old record. Their catch phrase – “we are collateral damage”, frankly, doesn’t hold water any more.

Business, whether it involves selling food or toilet paper involves risk. Economic conditions, consumer demand, quality of product and brand and reputation in the market can either make or break your business.

This time last year, everyone was clamouring for the Chinese dairy market. Reports were rife of cartons of infant formula being swept off supermarket shelves and being sold through backdoor by retailers.

This was NZ Brand Inc in action. Propped up by New Zealand’s quality and clean-green image, everyone was jumping on the bandwagon of the lucrative Chinese market. One Auckland processor was packing 300,000 cans of infant formula a month for a range of small brands.

No one is taking anything away from these small and medium dairy exporters – they are astute businesspeople in their own right. However, their success in China has only been possible as a result of New Zealand’s great dairy reputation – fostered over the years by Fonterra.

When the dust settled on the false botulism scare, it became clear Fonterra wasn’t at fault. Agreed the co-op’s communications strategy left much to be desired, but blaming it for the demise of contracts and crash in sales is a bit over the top.

During the good days, everyone was happy to ride Fonterra’s coat tails and feed off New Zealand’s clean-green reputation. Now, everyone wants a slice of the co-op because their business has slumped.

Fonterra, the world’s fourth largest dairy producer, has its reputation to maintain. It’s not the co-op’s job to protect small exporters who have piggybacked on it into the Chinese market.

Every business has its risks. The Infant Formula Exporters Association should have had a crisis management plan in place to deal with road bumps in China. They haven’t been abandoned. The Government provided $2 million in travel grants for these companies to visit key markets as part of the rebuilding process.

However, blaming Fonterra and whingeing about the lost market doesn’t wash anymore and they must take greater responsibility. When the good days return, many will again be clamouring for a seat on the Fonterra bandwagon.

NEWS THAT Martyn Dunne, currently New Zealand High Commissioner to Australia and a former head of the Customs Service and senior army officer, has been named head of the Ministry for Primary Industries (MPI) is good news for the primary sector.

Dunne will take up his three-year term on November 18, succeeding Wayne McNee who left in July to join LIC.  Scott Gallacher has been acting director-general since McNee’s departure.

Primary Industries Minister Nathan Guy believes the appointment signals a fresh start for MPI. Federated Farmers has also welcomed Dunne as the new director-general, rightly noting that he “brings a completely new dimension to the leadership of the MPI”.

DairyNZ also welcomed his appointment. Chair John Luxton says MPI has a vital part to play in enabling the primary sector to make the most of the opportunities to grow our export value.

The State Services Commission says Dunne has been high commissioner to Australia since 2011, following six years running the Customs Department where he oversaw a strengthening of border protection.

Dunne’s professional background and high-rank military role, and his experience in trade access, customs and international relations make him a good choice to head the country’s most important government department.

This is a very important role, given that the primary industries remain the backbone of New Zealand’s economy, accounting for at least 70% of New Zealand’s exports generating annually about $32 billion.

MPI has been criticised in recent years, not least for its role in introducing the kiwifruit wasting disease PSA and for the muddled paperwork that stalled meat exports on China’s wharves this year.

The ministry has undergone a lot of change since it was formed from the merger of the Ministry of Agriculture and Forestry, the Ministry of Fisheries and the New Zealand Food Safety Authority. It now needs a sustained period of stabilisation and consolidation.

Let’s hope Dunne’s leadership at MPI will bring the ‘fresh start’ Minster Guy has called for as well as the stability New Zealand’s primary sector needs.

QUESTIONS ARE piling up as the Government launches its inquiry into Fonterra’s false botulism scare.

One month ago, questions were swirling around Fonterra’s handling of product recall and how a dirty pipe at a Waikato factory could derail our global dairy exports. Fonterra management’s inquiry has traced back manufacturing of the potentially contaminated WPC80.

However, attention is now focused on the tests in New Zealand. Enter AgResearch, an SOE describing itself as “one of New Zealand’s leading research organisations”.  AgResearch’s purpose, its website says, is to enhance the value, productivity and profitability of New Zealand’s pastoral, agri-food and agri-technology sector value-chains to contribute to economic growth and beneficial environmental and social outcomes for New Zealand”.

If Fonterra is to be believed, it was AgResearch’s test results received on August 2 that triggered the precautionary recall of WPC80 from eight customers. The recall was complex as the 38 metric tonnes of WPC sold to customers had been turned into a variety of value added products – infant formula, sports drinks and animal feed.

For its part, AgResearch says it never confirmed the presence of Clostridium botulinum in the isolates provided by the co-op. It had detected the possible presence of Clostridium botulinum and recommended further testing.

This calls into question Fonterra’s testing regime. As the world’s largest exporter of dairy products, shouldn’t it have access to testing facilities that can confirm immediately the presence of bacteria and harmful substances in any of its dairy products?

It is clear Fonterra acted solely on the test results from AgResearch in initiating the recall and going public. Was it the correct decision? Apparently not, and in hindsight more tests outside New Zealand would have confirmed that the strain present in WPC80 was Clostridium sporogenes, and not the fatal Clostridium botulinum.

The damage to Fonterra, and New Zealand’s trading credentials, anxiety to consumers and losses to customers caught up in the recall is hard to measure. Surely, some of the eight companies involved in the recall will be recouping their losses from Fonterra.

Fonterra provides ingredients to customers worldwide. While the safety and quality of its products may not be questioned by these customers, they will be concerned about its loose testing regime— where one set of test results can be misinterpreted and set off a train of events as seen last month.

Fonterra, AgResearch and MPI will all have their say at the Government inquiry.  Whatever the inquiry concludes, steps must be taken to prevent a repeat of the WPC80 fiasco.

For Fonterra and AgResearch’s sake, let’s hope everything in life  happens for a reason and something better always comes out of it.

THE LATEST KPMG Agribusiness Agenda suggests a need for much greater understanding of the agribusiness sector by the country’s wider population.

“The importance of the primary sector to New Zealand’s economy is not well understood by wider society,” the report says. “We are now predominantly an urban-based population. Many New Zealanders’ knowledge of the rural sector is limited to media reports that predominantly focus on the sector’s issues and failings.

“If we do nothing, we risk a deepening ‘them and us’ divide. An important first step is to gain an understanding of why we do agriculture in New Zealand, from our many different perspectives. Then we can search out collective win/win solutions for the key issues facing the primary sector.”

KPMG suggests bridging the divide by achieving wider accord on the key issues.  It calls on the agri-sector to lead a fact-based conversation about the issues rather than sit by while mainstream media continue to portray agriculture in a negative light, eg dirty dairying, expensive local produce and animal cruelty.

Says the report, with most of the population living in urban centres, any direct connection many New Zealanders once had with the land is dwindling. So it requires the collective agri-sector to take on the responsibility of educating and informing the wider population about the contribution it makes and the resources it needs to deliver its contribution.

“Every organisation and person involved in the industry needs to be prepared to become engaged in these critical conversations. At the end of the day, the outcomes will impact New Zealand’s future prosperity.”

It is important the sector does not appear defensive in leading these discussions. The debate must be balanced and based on facts.

“Identifying the areas that need sector leadership is not rocket science. They include taking greater responsibility for biosecurity; water management (both usage and quality); attracting sufficient talented people into the industry; managing the sector’s impact on the environment; and creating a stable platform for capital investment.”

Let’s begin this much-needed conversation now!