Bakers prefer butter, helping prices soar
Consumers around the world are willing to pay more for products containing dairy and this is driving demand for butter and cream, says Fonterra.
"The independent inquiry's narrative reads like something off television's 'seconds from disaster' and makes you wince. Yet we can be thankful it wasn't for real but the biggest of wakeup calls," says Andrew Hoggard, Federated Farmers Dairy vice-chairperson.
"To give you a flavour for how forthright it was, the inquiry said, "Describing the rework process in terms of use of a "dirty pipe" was uninformative and practically misleading, if not careless".
"Another thing the report identifies is that the error of judgment involved was and I quote, "not related to any inadequate approach to hygiene, but did involve a departure from appropriate risk management processes for the improvisations developed for the wet reworking process".
"The inquiry chair, Jack Hodder QC, hit the nail right on the head when he said the biggest thing that needed to change within Fonterra is in fact cultural.
"That includes a singular lack of people in the loop to comprehend how explosive the mix of C.botulinum, infant food, and parents was to Fonterra and New Zealand on a global basis.
"Being a shareholder myself, out and out financial performance mustn't come at the expense of the cooperative slipping up on either quality assurance or risk management.
"Farmers collectively own a global food ingredients business that must be on top of its game. Our customers and our consumers expect nothing less.
"We need the manufacturing process, product testing and quality assurance to all be drier than the milk powder we produce. We need global best practice product tracing systems to quickly locate product in hours and not days and this all needs people to comprehend what risk management is.
"We are going to see change start from the very top with the new board risk committee. It is deliberately split out from audit committee to improve Board oversight of reputational risk issues.
"That is what Fonterra shareholders entrust Fonterra directors with and it is supported by Federated Farmers.
"Given the report was refreshingly made public without any 'leak' preceding it, Fonterra is not looking to spin things but is showing a welcome honesty. What's more, the press conference was live streamed on the web and the report is available in multiple languages.
"You have the impression this is going to be a very different Fonterra and for the better to," Hoggard says.
