What Would Synlait Be Worth to Fonterra or a2 Milk?
Speculation of a possible joint move by Fonterra and a2 Milk to buy Synlait raises a much bigger strategic question, says agribusiness expert Dr Nic Lees.
She says the dairy co-op’s balance sheet is no longer in a position to handle more of the investment culture, while its leadership continues to deny there are any issues with strategic direction.
Guiney, a director for three years, says because the current leadership is overseeing the recruitment of a new chief executive, farmers face more of the same from the co-op.
“We have no indication of any review of Fonterra’s strategic direction, however, before they make this choice,” Guiney told Rural News.
“It’s hard to know what type of person you need if you haven’t articulated where you are going. When Fonterra has clarified a strategic direction shareholders can support with their capital, we will be able to employ the appropriate management and we will retain our milk supply.
“That may be specialist ingredients experience, for example, an area in which we have competitive strengths.
“Whatever the choices, Fonterra shareholders aren’t fools; they’ve heard the rhetoric on offshore milk pools for example, but they can read the numbers; these are not delivering to NZ farmers,” Guiney says.
“I firmly believe we must work together to retain our competitiveness and that our future is a cooperative one, but not without accountability for board and management’s performance with the owners’ capital.”
Guiney claims that if shareholders are not convinced, they will leave with their milk, which ultimately leaves Fonterra uncompetitive within NZ and in a destructive procurement-war cycle.
“We don’t need to let ourselves get to that position; what we do need is better-targeted investment in our areas of comparative advantages.”
