Fonterra FY26 Results: $9.69 Milk Price, $3.4bn Profit
Fonterra has unveiled its annual results for the 2026 financial year, posting $27 billion in revenue and close to $20 billion returned to New Zealand farmer owners and unit holders.
Waugh, a former chief executive of Australian dairy processor National Foods, says this question keeps him awake at nights.
In his pitch to Fonterra shareholders, who are voting for three directors from a field of six, Waugh says Fonterra's payout is not even a key measure of performance.
"After all the years of substantial capital investment, focus on brand building and massive growth in milk volume, why is the Fonterra farmgate payout not substantially ahead of other milk processors?" he asks.
"We are constantly told that scale and global relevance are critical but 15 years after Fonterra was formed, the payout demonstrates no real advantage over other local competitors who trade in the same global market."
Waugh and his wife Catherine bought a dairy farm at Te Awamutu in 2012.
He says he has always been a supporter of the Fonterra concept for New Zealand. "My years of working in the global dairy markets convinced me of that.
"I am frustrated with the commercial return we as shareholders and owners get from Fonterra.
"I know from my own corporate experience that it's easy to look over the fence into a business without all the facts and be critical; I don't want to do that. I want to be part of the solution to improve the governance and performance of Fonterra."
Waugh is concerned at the increasing presence of offshore owned dairy processing capacity in NZ and the amount of milk they are able to attract.
"Those companies, some larger than Fonterra and not having to play by the same rules, have the ability to continue to devalue our cooperative in terms of milk payout."
Waugh says the dairy world is changing, both in markets and in NZ, and we need to ensure Fonterra is crystal clear on how it will survive and thrive and pay its shareholders a competitive milk price and a competitive return on capital.
Waugh joined the New Zealand dairy industry in 1991 after 15 years with Ford Motor Company in NZ, Australia and Taiwan.
He worked for the New Zealand Dairy Board for ten years starting as general manager of the New Zealand Rennet Company in Taranaki.
From 1997 to 2001 he was the regional chief executive for the New Zealand Dairy Board businesses in Australia, South Africa and the Pacific.
He then spent eight years with National Foods in Australia, the last four years as the chief executive officer.
"During my time at National Foods we transformed the business from a public listed company to a privately owned business growing from $1.2 billion in turnover to $2.5b; once again strategy development and delivery, and commercial performance were my core responsibilities."
Waugh is a director of Seeka Kiwifruit Industries, The Heat Group in Australia, and has been chairman of Moa Brewing since February this year.
No pay rise
Fonterra chairman John Wilson will miss out on a pay rise this year -- if a recommendation is accepted at Fonterra's annual meeting later this month.
The co-op's remuneration committee recommended no change to Wilson and the other directors' fees.
Wilson is paid $405,000 a year. Directors receive $165,000 and subcommittee chairs are eligible for a $31,000 top-up.
Fonterra Shareholders Council members will also miss out on a raise. The chairman's honorarium will remain $90,900. The deputy chair will receive $55,550 and councilors $30,000. – Greg Ford
