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.
Peters, who is trying to get back into Parliament after NZ First were thrown out in 2020 after forming a coalition with Labour in 2017, made these claims in a recent election special interview with Country TV.
The former deputy prime minister claimed that because both he and his New Zealand First party colleague Shane Jones ‘came from dairy farming backgrounds’ they understood how critical the sector is to the economy.
“There could be much better value add,” Peters told Country TV.
He said that added value could be maximised, “in the interests of our workers, and our businesses and our economy”.
Peters also claimed that Fonterra’s move to sell infant powder to China is not a smart one.
“Why aren’t we leading the infant formula sales around the world? All the things you see in Scandinavia or Switzerland and, dare I say it, in places like Singapore, all those added value things, we should have been doing.”
Peters puts some of the blame for this on the industry itself.
“We’ve made some serious mistakes and I’ve always been to Federated Farmers meetings and said ‘Look, Gentlemen and Ladies, I don’t understand what you’ve done to your industry.”
Peters went on to claim that Fonterra almost went broke!
“How could it go broke on a speculative deal in China?”
This was seemingly in reference to the co-operative’s deals in China.
In 2021, it was reported Fonterra’s balance sheet would take an $880 million hit after divesting its China farms and joint venture farms in the region, as well as reducing its shareholding in Beingmate.
The sale of Fonterra’s Ying and Yutian Farm was completed in April of that year for $552m and the subsequent sale of the Falcon China Farms joint venture was completed two months later for $88m, bringing in a $360m loss on investment.
However, the co-operative’s investment in Beingmate was worse for its shareholders.
Back in March 2015, Fonterra paid $756m for an 18.8% stake in the infant formula maker but its share value has tumbled since the end of that year, forcing Fonterra to book sizeable writedowns.
According to Northington Partners, Beingmate shares sold over the course of 2020 and 2021 fetched the co-op $273m, resulting in an investment loss of $519m over a six-year holding period.
Peters says Fonterra had to be ‘saved’ by the farming community.
“All of this has been a massive cost,” he claimed. “They got fooled, they got flummoxed, and they made a big mistake.”
Peters also added that representatives of the farming community need to “stand up as well and start owning up to the mistakes they’ve made, and decisions they could have made much more cleverly”.
See the full story on Country TV, on Sky channel 81, or watch FREE of charge on demand at www.countrytv.co.nz
