Thanks John, for the milk price!
Dairy farmers have former Fonterra chairman John Wilson to thank for the milk price they enjoy today, says Sir Henry van der Heyden.
WE FORMED Fonterra on a firm belief that cooperatives are about unity and collective strength. We have that strength and this year we challenged ourselves to come up with ways we could use it more effectively for you.
We are aware of the increasingly diverse expectations you as farmers have of your cooperative, and the changing demands for information.
We have worked to provide significantly more support at a community leadership and on-farm level in the environmental area, working with Dairy NZ and other providers. We have made good progress but we recognise we can do more, as we strive to balance our aims to provide high levels of service to our owners while also addressing compliance responsibilities.
Recently, we announced Farm Source. It is designed to support you to succeed and grow so our cooperative can increase milk supply here in New Zealand: that is core to our business.
Let me be clear – this is not just a rebrand. We would not waste farmers’ hard-earned money in that way. It is a total re-look at the way our cooperative supports you as owners.
Farm Source connects our farmers to the full strength of our cooperative through a coherent package of service, support, rewards, online and financial options. It is a significant step up in the way we will work with you. We are bringing our farm support focus directly into the regions to better meet your requirements.
Providing timely information is a priority. Today we as farmers get a much wider range of information from our cooperative. This includes on-farm data, fortnightly GDT results, the monthly Global Dairy Update with its analysis of production, pricing, market supply and demand trends, emails, and your monthly Farm Source magazine.
Another of my priorities is ensuring everything we do ties back to our core values and the reasons we created Fonterra.
One of our core values is ‘do what’s right’. We did that at the beginning of August 2013 with our precautionary recall of WPC80. We had a potential food safety problem and we were not prepared to take even the slightest chance with the safety of consumers, especially infants.
While we received the all-clear on the safety of the product, it was also crucial that we conducted a thorough review of the events which led up to the recall, as well as the way we handled it. The board’s commissioning of an independent inquiry and the open way in which its findings were released, were vital to rebuilding confidence in our cooperative.
The recommendations made, and the findings of management’s own review, took a lot of work. The finding that we have robust safety and quality systems meant we could focus on strengthening them and raising our sights to a goal of becoming a global benchmark for food safety and quality with a four-year programme now underway. The independent inquiry committee’s July review acknowledged and commended our progress.
It is worthwhile reflecting on what we have achieved together.
We set out to create a cooperative that would deliver for our farmers first, and also for our country. Dairy is the important mainstay of our economy, contributing 33.5% of New Zealand’s total merchandise exports in 2013.
Since 2001, our revenue has grown from $12.5b to $22.3b. Our consumer and foodservice sales have risen from $4.6b to $6.3b. Our ingredients revenue has increased from $7.9b to $16b. We have succeeded in our aim to have a strong, competitive cooperative, making our way in the world, bringing the returns home.
An interesting measure is that at Fonterra’s formation our farmgate milk price was at a 37% discount to that in the United Kingdom. Today there is no discount.
The value of your shares has grown from $4b to $10b.
We have come far and now we need to go further. By 2025 we want to be a globally relevant cooperative with $35b in revenue and with access to 30b L of milk from New Zealand and strategic geographic milk pools.
The over-riding priority is to ensure that over time we grow pay out from a well-executed strategy.
As a country, as well as a cooperative, we must continue to take the long view. Our volume and value strategy works for Fonterra and it works for New Zealand.
