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.
An online petition calling for a boycott of Fonterra products is gaining momentum on the change.org website; by last Tuesday 18,198 people had signed.
The petition was launched by southwest Victorian farmer Karrinjeet Singh-Mahil, who says that in May last year Fonterra dropped its milk price by 70%; farmers who had already been paid higher advance rates had to pay back the co-op via a ‘support loans’ package.
Australia’s largest dairy processor Murray Goulburn also slashed its payout and clawed back money via a ‘milk supply support package’. However, this month MG said it would repay money paid by existing and retiring suppliers under the clawback scheme, in a move to stem a massive fall in supply.
But Fonterra won’t follow suit, instead announcing a forecast 2017-18 milk price of A$5.30-$5.70/kgMS. It will also make an extra monthly payment of A40c/kgMS to all current, retired and recommencing suppliers affected by the clawback.
Singh-Mahil says in her online petition that Fonterra’s decision to slash the milk price had put many farmers out of business.
“Others had to sell cows to pay bills; many are still in terrible financial straits and cannot afford to buy daily necessities such as food or fuel.
“Fonterra said recently it will take the money it stole from farmers in May and June 2016 to try to bolster their milk price in 2017-18 so that they attract more farmers to supply them.”
She is urging consumers to “send them a clear message they need to pay everyone back”.
“Leave their products on the supermarket shelves: Western Star Butter, Anchor milk and cream, Perfect Italiano cheese, Mainland cheese and Woolworths homebrand milk.”
But the company representing Fonterra milk suppliers in Australia is supporting the co-op. Bonlac Supply Co chair Tony Marwood says the forecast closing price range, and the A40 cent payment, show Fonterra is listening to farmers and is trying to rebuild confidence in Australian dairy.
“We farmers need timely and clear price information to plan ahead. Fonterra is first to provide a closing forecast price range for next season and this… is helping us budget with certainty,” says Marwood.
“We have been working with Fonterra on what Murray Goulburn’s decision to forgive its milk supply support payment loan package means for Fonterra’s Australian suppliers, and the most appropriate way to respond.
“Fonterra will pay an extra A40c/kgMS on top of its milk price for next season to all current, retired and recommencing suppliers.
“The BSC knows we had to be fair and equitable for all our farmers, understanding that many farmers made different decisions at the end of last season to suit their businesses.
“With the additional payment being available on next season’s production it gives our farmers the opportunity to get more out of it if they wish to grow.
“It also puts money in farmers’ hands almost immediately to assist with cashflow.”
Bonlac is working with Fonterra on a more transparent milk price, and we look forward to communicating that soon, Marwood says.
“The last twelve months have been difficult for all farmers, and today’s announcement is a step towards helping restore confidence in our industry,” says Marwood.
United Dairyfarmers of Victoria says Fonterra’s decision not to reimburse farmers who switched processors during the upheaval last year is a worry.
“Fonterra… is taking steps to provide a more stable commercial environment for its farmers by providing an indicative forecast for the season’s milk price,” UDV president Adam Jenkins says. “But nothing has been done to address the heartache caused to many farmers who bore the burden of management decisions last year.”
