‘Fonterra not all bad’

But speaking to dairy farmers at the federation’s annual conference in Wellington, Hoggard also called on Fonterra to improve its communications with farmers. The co-op needs better internal two-way communication – from the board to farmer shareholders and vice versa, he says.

“The slogans and catchphrases need to go and be replaced with plain English. As a farmer told me the other day, if he heard about ‘turning the wheel’ just one more time he was going to shove that wheel where the ‘sun don’t shine’.  The Shareholders’ Council is vital for that communication, and it needs to ensure the board is in touch with farmer concerns and that co-op values are maintained.” 

Hoggard says some people looking at the GDT auction itself believe that somehow it is the cause of all this drama. But, he says, the GDT is simply the messenger, and the message is that global supply is greater than global demand.

“Do we execute the messenger simply because we don’t like the message? I believe that was standard practice in the days of ancient Rome.”

Hoggard says GDT provides a great deal of transparency for dairy farmers, enabling them to get a gut feeling for how the market is performing.

He is also concerned about criticism of TAF – claims that it’s to blame for everything and isn’t working. 

“Again I don’t think so. TAF’s purpose was to sort out redemption risk and it’s succeeding in doing that. Blaming TAF comes down to some confusion between Fonterra’s strategy and Fonterra’s structure. It is true that Fonterra’s share of milk processed in New Zealand has fallen, but in pure quantity Fonterra is still processing more milk than ever before.

“The main things to remember are that TAF didn’t cause the Chinese to over-purchase, TAF didn’t cause the world to have generally good growing conditions, TAF didn’t cause Vladimir Putin to ban the import of European dairy products into Russia, nor did it cause ISIS to emerge in the Middle East.  And it didn’t cause Ebola.”

Hoggard says he can’t believe the seemingly continual restructuring of Fonterra: it can’t be good for any company.