Bring on 2019!

WITHOUT DOUBT 2018 will be remembered as Fonterra’s annus horribilis.

It is not overstating the case to say that the past year has seen a series of failures and fiascos for the dairy co-op.

For the first time, it reported a net loss for the financial year of $196 million. Meanwhile, weaker global dairy prices have forced the co-op to keep lowering its forecast payout from an opening estimate of $7/kgMS in May to an expected $6kgMS by year end (Fonterra was due to update to its forecast after Rural News went to press).

On top of this, during the year the dairy company has stumbled from one public disaster to another, notably the under-performance and over-the-top pay to former chief executive Theo Spierings, and the ongoing financial calamity of its investment in Chinese infant formula company Beingmate.

This was topped off last month, when only two of the three director positions were filled in the annual director elections, meaning another election needs to be held.

Last month’s election saw Leonie Guiney – who was ousted from the Fonterra board in 2017 – as one of the two directors elected, along with former Zespri chair Peter McBride. However, two candidates who were recommended by Fonterra’s ‘independent approval process’ were rejected by farmers.

The election process rules meant that the three failed contenders – the two board-approved and the other self-nominated candidates – were ineligible to stand again when Fonterra held a special election.

But, for some reason, the Fonterra shareholders’ council has now decided to change its own election rules. The last-minute rule change means it is holding another ballot this month and only the three candidates who failed to get over the line last time can stand.

However, incumbent director Ashley Waugh has ruled out standing again and only Jamie Tuuta and John Nicholls remain on the ballot.

No one is suggesting that either men are not credible candidates, but Fonterra’s eleventh-hour rule change looks like yet another SNAFU.

One can only hope that the upcoming vote for a new director is decisive and clear. Then Fonterra can finally put a difficult and messy 2018 behind it and head into 2019 focussed on getting its house and company performance in order.

Dangerous games

WHAT’S GOING on at Landcorp? It appears the state-owned farmer has taken a dangerous lurch into the political world with its recent actions.

An Official Information Act (OIA) request has revealed that the Government-owned and controlled farmer lodged a late submission to the Tax Working Group (TWG), advocating for taxes on water and nitrogen fertiliser and saying it was “not opposed” to a capital gains tax.

This pro-tax stance is directly at odds with the majority view of the farming sector and raises questions about why the state farmer would stick its beak into highly political issues.

That a government body should be seen as promoting and advocating for such overt, politically charged tax policies is a big enough concern. However, to also learn that Landcorp lodged its submission to the TWG more than a month after applications closed gives the impression it was encouraged to do so by its political masters.

This should be a major concern for all taxpayers that the long-held tenet of an apolitical public service is now being called into question. One also would have to ask if the Minister responsible for Landcorp – Shane Jones – is either asleep at the wheel or complicit in the SOE’s irresponsible and dangerous politicking.

The state farmer must not only be seen as apolitical, but also perceived as being apolitical. At present, perception and reality are opposite.

And Landcorp’s actions have – unsurprisingly – attracted political fire. Current National Opposition members and former agriculture ministers Nathan Guy and David Carter have heavily criticised its behavior. Carter has accused the state farmer of having been encouraged ‘behind the scenes’ by its political masters to present a pro-tax opinion from the farming sector to the TWG.

The TWG submission comes on top of the state farmer’s highly questionable appointment of a number of high-profile environmental activists to advisory roles in its midst. Questions are now also being raised about whether these appointments are just a sop to the green-leaning politicians occupying the Treasury benches.

Former AgResearch and Scion (forestry) boss Warren Parker has just been appointed chair of Landcorp. As a former high-level public servant, Dr Parker will be well aware of the sacrosanctity of an apolitical stance needed at Landcorp. He needs to pull the state farmer and its management back into line quick-smart.

If he fails to do so, Landcorp will face the wrath of avenging politicians hell-bent on revenge when the government changes, as it will at some time.

New year, new start!

Let’s hope 2019 proves a better year for Fonterra than 2018

Fonterra shareholders are starting 2019 with high expectations.

Most farmers’ New Year resolution will be to continue producing milk sustainably and efficiently in the hope that global milk prices will firm.

However, looming large on their minds will be the state of their cooperative; the bottom line is Fonterra cannot afford to lose money this year after its $196 million loss in 2018 – its first ever.

Following the last director elections and the reshuffling of guard at Fonterra helm, shareholders will be feeling hopeful.

Fonterra shareholders have little to do with the day-to-day running of the $20 billion business. That envious task is left to the 11-member board; consisting seven farmer-elected and four appointed directors and the chief executive – who is appointed by the board.

Frustrated farmers have watched the board fail to contain the disastrous foray into China Farms and Beingmate Food.

At home, Fonterra is losing milk supply to rivals and continues to play second fiddle to smaller processors when it comes to the milk payout battle.

Thus, farmer shareholders seeking real change in their co-op focussed intently on last year’s board elections.

In what could be best described as a slap in the face of the board and Shareholders Council, farmers rejected two of the three nominees for directorship.

The first director election saw shareholders back the board and council’s choice, Peter McBride, a respected agribusiness leader.

However, they rejected the other two official nominees; sitting director Ashley Waugh and Maori agribusiness leader Jamie Tuuta.

Instead farmer shareholders voted in outspoken former director Leonie Guiney. In the second election, Canterbury farmer John Nicholls beat Tuuta for the third seat.

Fonterra shareholders have realised that change must start with the board; the old boys club from the early days of Fonterra’s formation needs to go.

Current chairman John Monaghan, on the board since 2008, isn’t exactly the breath of fresh air that the co-op needs.

Shareholders want a new chair with strong leadership skills, a revitalised and broadened board and a more disciplined and collaborative board culture.

A re-look at the director election process will also restore some confidence among shareholders on governance.

There are some signs that Fonterra is changing. Confirmation of Miles Hurrell as chief executive would be a step in the right direction. New auditors will be in place at the co-op next year.

A review of the co-op’s assets is underway and shareholders can expect Beingmate and other non-performing assets to go.

The appointment of Guiney as chair of the board risk and safety committee and member of the audit and finance Committee will also reassure nervous farmer shareholders.

Fonterra is not out of the woods, but farmers will be hoping that 2019 won’t be bad as last year.

Woolly thinking

dogIT’S NO secret that current wool prices are awful, but the outlook for the fibre has been terrible for many years.

For some types of wool, more has been put in storage than has sold in the last nine months, mainly due to lack of demand from China.

According to reports, current wool exports to China are 40% lower than last year. This highlights the folly of the industry relying on China alone.

As Wools of NZ chair Mark Shadbolt says, “The world is our market so as soon as you allow 60% of all of our exports to go into one country then you are exposed.” Continue reading

Sailing away

A cupTO USE the latest America’s Cup parlance, the New Zealand primary sector is ‘up on its foils’ at present.

According to the latest Rabobank survey, farmer confidence and spending intentions jumped to record levels in the second quarter of this year, buoyed by improved commodity prices. Continue reading

Front-foot it

cricketAS THE curtain comes down on another successful Fieldays, NZ’s farming sector has experienced something uncommon nowadays – a raft of positive media coverage.

Positive descriptors such as innovators, economic powerhouse, world-leading food producers, celebrating farming and emerging leaders – to name but a few – were interspersed among the myriad of media stories covering the event.

Contrast this to the regular, daily bashing farming usually takes from urban-dominated media and certain self-important, inexpert, opinionated talking heads.

As Primary Industries Minister Nathan Guy says, the rural story needs to be told straight from the woolsheds and dairy sheds

“It’s going to need to be from someone in a Swanndri, not a suit,” he says.

Who else can be relied on to explain that farmers have spent at least $1 billion of their own money on environmental measures onfarm?  Certainly not the myopic anti-farming crusaders and their acolytes such as SAFE, Greenpeace or Fish and Game.

Yes, those in farmers who are polluting waterways or treating animals and workers badly need to be held accountable and punished. But these are far and away a minority in the sector – not that you would believe it by the media coverage farming usually gets.

As Guys says, if we really want a message to change the public perception of farming, “it can’t just come from politicians”.

Who else can explain that farmers have fenced enough waterways to cover the distance from Auckland to Chicago and back again? Who else can show the world-leading and innovative things going on every day on New Zealand’s farms?

Events such as Fieldays and environmental award competitions are good, but they happen only annually. Plenty of other good things are happening in our industry every day and we all must take the opportunity to highlight these.

In the age of social media, farmers themselves have the ability to influence public opinion – just as the anti-farming types are doing every day.

Guy has challenged the farming sector to promote our industry to our friends and family who might not know much about it.

We should all take up that challenge – today!

 

 

Will the naysayers ever stop?

You can't negoitate with eco-terrorists

You can’t negoitate with eco-terrorists

THE RECENT release of the progress report on the last three years of the Sustainable Dairying Water Accord has sparked all the naysayers of the dairy industry into another series of spiteful attacks on farmers.

Granted, the report does highlight things that haven’t yet been achieved, but to be fair it doesn’t attempt to make excuses either. Continue reading

Country of origin labelling a cool idea

US meat label articleMANDATORY LABELLING of fruits and vegetables is back on the public agenda.

A recent joint survey, by Horticulture NZ and Consumer NZ, shows 70% of consumers want to know where their fruit and veges come from. Only 9% of those surveyed did not support mandatory country-of-origin labelling (CoOL).

Coinciding with the survey results is the drawing of a bill on mandatory labelling of fruits and vegetables, introduced to parliament by the Green Party. Continue reading

We’re all in this together

CPWL5THE DEBATE about New Zealand’s water quality has become too simplistic, with far too much finger pointing and blame in mostly farming’s direction.

It is clear that our water quality is bad enough to require action and, in some instances, it is getting worse.

Action is needed. Too often critics claim nothing is happening, everything is getting worse, no-one cares and the regulators are all in the pockets of profiteers. That’s untrue. Continue reading