Former Fonterra Shareholders Council chairman Simon Couper explores Fonterra's core advantage.
He waka eke noa – we’re all in this together. It’s a phrase that seems to be coming up a lot lately, and it reminds me how powerful community can be.
For wider New Zealand, the challenges brought about by COVID-19 have been significant. But they have also presented some unexpected opportunities – to rediscover community spirit, spend quality time with our families, and do what’s best for the greater good.
It’s been humbling to see how the vast majority of kiwis have accepted the guidelines, inconvenienced themselves, and in many cases suffered significant stress and disadvantages so that the common good can be put first. The ultimate outcome is too far down the track to predict at this stage, but it’s fair to assume that the collective effort so far has left us in a much better position than an ‘everyone for themselves’ alternative.
For us farmers, there were plenty of challenges well before COVID-19 arrived. Some of these, like the recent crippling drought and devastating floods, are as beyond our control as the pandemic, but with others we have options.
More than ever for me in these testing times, belonging to the Fonterra Cooperative is one of them.
We’re all starting to focus on what the milk price may be as we prepare budgets for next season, and while at this early stage it’s too early to tell, we can be certain that Fonterra will be working hard to maximise the price for its suppliers, using a robust and transparent calculation. It feels good to know that all kiwi dairy farmers benefit from this, since Fonterra’s milk price guides the benchmark price for all New Zealand processors.
Beyond the milk price, a co-op with the scale and diversity of Fonterra is well placed to weather economic uncertainties and an ever-changing world. With a wide mix of products and markets made possible by a large number of suppliers pooling their smarts and hard work, production can be adjusted to respond to market conditions and demand. In the recent months of trade uncertainty, this has held us in good stead to keep operating – our tanker drivers keep collecting the milk, jobs are protected so it can be processed and product dispatched, and it’s being delivered and sold to consumers that want and need it, in New Zealand and around the world.
Beyond the recent challenges brought about by COVID-19, Fonterra often leverages its resources and reach to help its farmers and their communities through challenging times. There have been emergency responses in the face of Edgecumbe and Southland floods, Kaikoura earthquakes and Northland droughts. In the past, support loans have been offered. Now, we have a simple Fixed Milk Price tool to help manage the uncertainty of milk price volatility. Underpinning every business decision is our purpose which includes ‘tātou tātou’ - all of us together - and a mandate to ‘create goodness for generations’. In addition, farmers benefit from a dedicated Shareholders’ Council, made up of fellow farmers, whose role it is to represent their interests directly to the board – something you wouldn’t get in a typical corporate structure.
That spirit of collective effort that has built our New Zealand dairy industry is alive and well today, with industry bodies like DairyNZ and Federated Farmers working on our behalf. Each one has a different mandate and focus, but both are driven only the best interests of the farmers they work for – now and into the future.
Right now, we have an opportunity to choose the strength of community through the DairyNZ milksolids levy vote. DairyNZ typifies that collective approach - by combining our resources with the brainpower of subject matter experts, our businesses receive the tools, research, and science that we all need to be profitable and sustainable into the future. These industry needs won’t disappear, so we as farmers need to think very carefully about what it would look like for us without DairyNZ guiding this investment. In my view, choosing the efficiencies of a co-ordinated and co-operative approach is the obvious choice. I encourage you get involved in this important industry decision by informing yourself about the work that DairyNZ is doing to protect your business, now and into the future. Voting is open now and closes on May 30.
When we all work together, we can achieve great things. We already have. If we get it right, then the next generation can continue to do what we do best, producing world-class New Zealand milk, knowing that our industry has our back. He waka eke noa – we’re all in this together.
• James Barron is chairman of Fonterra Shareholders Council