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.
Federated Farmers Dairy chairman Andrew Hoggard told its council conference in Nelson last week that the industry needs to better brand the NZ story.
"Our companies need to continue to look to add value, but also better explain how they are doing it," he says.
"At times Fonterra fills me with hope, and then fills me with doubt. Its communication to farmers on what it is doing and why, needs to improve dramatically."
Hoggard says competition for dairy in the global market is getting stronger.
The CAP reforms were supposed to be about a rebalancing in Europe with production moving to the green belt, countries like Ireland. If that occurs Europe it will become more competitive, even without support, and more innovative, he adds.
"When your average herd size is only 10 cows, to lift production by 10% only equates to one cow, and there is a very low marginal cost to that.
"So even if we had a level playing field, Europe and others could well perhaps be tougher competitors than they are now. It means our industry needs to get smarter. We have rested on our laurels to a degree that consumers automatically associate New Zealand products with high standards and safe food.
"As mentioned farmers in New Zealand have invested heavily in environmental initiatives, but not just that but also animal welfare, there is a good story to talk about with climate change, and many other aspects."
Another issue facing the industry is the impact on dairying on water quality.
Hoggard says farming definitely has an impact on water quality.
"As an industry we need to continue working on improving that, and if farming practices were to emerge upstream of me that were to put that quality at risk I would be the first to rally against that, being able to take my kids playing in the river is very important to me.
"But this debate does get slightly hysterical at times with claims that our rivers are ruined and you can't swim in any of them. Which is plainly not true, it absolutely gets me livid that every time any mention of the Manawatu river is made, they always say 'reportedly the worst in the Western world' based on one study where the author himself disputed that headline.
"But it was once falsely reported as the worst in the Western world which means that media from here on out can say it was 'reportedly' the worst, based on a false report they made." – Sudesh Kissun
