Thursday, 06 December 2018 10:36

Bring on 2019 — Editorial

Written by 
Fonterra’s CFO Marc Rivers, chair John Monaghan and CEO Miles Hurrell fronting at this year’s annual result briefing. Fonterra’s CFO Marc Rivers, chair John Monaghan and CEO Miles Hurrell fronting at this year’s annual result briefing.

Without doubt, 2018 will be remembered as Fonterra’s annus horribilis.

It is not overstating the case to say that the past year has seen a series of failures and fiascos for the dairy co-op. 

For the first time, it reported a net loss for the financial year of $196 million. Meanwhile, weaker global dairy prices have forced the co-op to keep lowering its forecast payout from an opening estimate of $7/kgMS in May to $6.25 to $6.50/kgMS.

On top of this, during the year the dairy company has stumbled from one public disaster to another, notably the under-performance and over-the-top pay to former chief executive Theo Spierings, and the ongoing financial calamity of its investment in Chinese infant formula company Beingmate.

This was topped off last month, when only two of the three director positions were filled in the annual director elections, meaning another election needs to be held.

Last month’s election saw Leonie Guiney – who was ousted from the Fonterra board in 2017 – as one of the two directors elected, along with former Zespri chair Peter McBride. However, two candidates who were recommended by Fonterra’s ‘independent approval process’ were rejected by farmers.

The election process rules meant that the three failed contenders – the two board-approved and the other self-nominated candidates – were ineligible to stand again when Fonterra held a special election.

But, for some reason, the Fonterra shareholders’ council has now decided to change its own election rules. The last-minute rule change means it is holding another ballot this month and only the three candidates who failed to get over the line last time can stand.

However, incumbent director Ashley Waugh has ruled out standing again and only Jamie Tuuta and John Nicholls remain on the ballot.

No one is suggesting that either men are not credible candidates, but Fonterra’s eleventh-hour rule change looks like yet another SNAFU.

One can only hope that the upcoming vote for a new director is decisive and clear. Then Fonterra can finally put a difficult and messy 2018 behind it and head into 2019 focussed on getting its house and company performance in order.

More like this

Winston Peters questions Fonterra divestment plan

Foreign Affairs Minister Winston Peters has joined the debate around the proposed sale of Fonterra’s consumer and related businesses, demanding answers from the co-operative around its milk supply deal with the buyer, Lactalis.

Editorial: A new era for two co-ops

OPINION: Farmer shareholders of two of New Zealand's largest co-operatives have an important decision to make this month and what they decide could change the landscape of the dairy and meat sectors in New Zealand.

Should co-op sell its consumer brands?

OPINION: As CEO of the Dairy Board in the 1980s I was fortunate to work with a team of experienced and capable executives who made most of the brand investments that created the international consumer business Fonterra inherited. Soprole in Chile was the largest, but there were more than 20 countries where consumer marketing companies were established and Anchor and other brands were successfully launched.

Featured

'One more push' to eliminate FE

Beef + Lamb New Zealand (B+LNZ) is calling on farmers from all regions to take part in the final season of the Sheep Poo Study aiming to build a clearer picture of how facial eczema (FE) affects farms across New Zealand.

Winston Peters questions Fonterra divestment plan

Foreign Affairs Minister Winston Peters has joined the debate around the proposed sale of Fonterra’s consumer and related businesses, demanding answers from the co-operative around its milk supply deal with the buyer, Lactalis.

National

Machinery & Products

» Latest Print Issues Online

The Hound

Quid prod quo?

OPINION: Ageing lefty Chris Trotter reckons that the decision to delay recognition of Palestinian statehood is more than just a fit…

Deadwood

OPINION: A mate of yours truly recently met someone at a BBQ who works at a big consulting firm who spent…

» Connect with Rural News

» eNewsletter

Subscribe to our weekly newsletter