Expert Says Fonterra Backing Current Strategy With New CEO Appointment
The appointment of Richard Allen as Fonterra's new chief executive signals execution, not strategy, according to agribusiness expert Dr Nic Lees.
"He did and he's still going flat out," van der Heyden said in his address to the annual general meeting. "He joined in September. In just six months he delivered a full strategy refresh. It's a smart strategy. It plays to our strengths. Theo talks about volume, value and velocity. What he means is selling more, earning more and getting things done at speed. He knows how important it is to bring home the best total returns for farmers. He is totally committed to the co-operative and it shows."
Van der Heyden said you couldn't talk about the year without talking about TAF. "The words "redemption risk" can now leave our vocabulary," he said. "We have finally taken care of the problem of money washing in and out of the cooperative. Of course it was tough. No decision worth making is easy. Debate is the sign of a really healthy cooperative.
"We nailed what is important to us all as shareholders – 100% control and ownership. As a result 100% control and ownership has become non-negotiable for Fonterra. That effectively means we have actually strengthened our co-op.
"TAF is unique to us, created by us and voted for by us in the biggest voter turnout in our history. We are in the very early days of TAF's operation. Thank you all for hanging in there. It was a massive effort, but completely worth it."
On the subject of Raw Milk Regulations van der Heyden said "we certainly have no issue with robust competition. But we did have a problem with our competitors gaming the rules".
"A lot of work went on behind the scenes to stop this gaming and it was done with the competition running interference at every turn. But the Government listened to our case and we got the right result," he said.
"The icing on the cake is that our Farmgate Milk Price was put under the microscope and given a tick by the Commerce Commission.
"This is an excellent outcome for us all. Farmers must have confidence in the milk price. We need to acknowledge the hard yards which went into delivering this result – especially by the Council, led by Ian Brown and John Monaghan for the hours they spent making our case in Wellington."
Looking back, van der Heyden said it had been a huge year, "but it's been one huge year after another and every one of them has made us stronger".
"Together we've turned a collection of co-ops into the world's top dairy exporter. This didn't just happen. It happened because once again our farmers had the courage to make the big calls."
On Global Dairy Trade Van der Heyden said with "we have shown the world that we can rewrite the rules of engagement in just one stroke. globalDairyTrade created the world's first online trading platform for dairy commodities. It changed the game. It made pricing transparent."
The outgoing chairman also said he wanted to acknowledge the Shareholders' Council's role in the co-op's success. "Along the way they have also had to make some bold calls that have played a major role in ensuring we are a strong, successful cooperative. People ask me if I think the council's role is still relevant. My answer is absolutely. The board puts great store on the council in its role of representing farmers' views.
"That's why the board and Shareholders' Council have jointly established a Governance and Representation Working Group and it is looking at governance and representation roles. It is looking into the future and trying to anticipate the types of governance and representation our co-op is likely to need as the business grows over the next 5 to 10 years."
