Thursday, 19 December 2019 09:50

No value added — Editorial

Written by  Staff Reporters
Jayne Hrdlicka. Jayne Hrdlicka.

OPINION: The unexpected departure of A2 Milk’s chief executive last week was an unpleasant, but timely reminder of the destruction of value often seen between the farmgate and the end market.

Jayne Hrdlicka, apparently unaware that working for a global dairy business would involve international travel, resigned suddenly citing “excessive travel commitments”. She was in the job a mere 18 months, long enough to receive a huge share allocation as part of her salary package. She sold a big chunk of those shares, in two lots, making $4.3m and $2.1m respectively. 

The news of her resignation rocked the markets, wiping more than a billion dollars off A2’s market value.

There’s no suggestion of illegality here. But there’s a huge question for A2’s board about whether its own decisionmaking on the big calls like appointing the CEO is adding value for shareholders. In this case the answer appears to be ‘no’.

The same questions were of course levelled at Fonterra’s board this year and they also came up a long way short. 

You can’t argue that a $605 million loss on the back of billions of litres of farmers’ hard work isn’t a huge fail. 

Theo Spierings, the chief executive who presided over the company in the years leading up to this result, was paid $43m during his seven-year reign.

That’s the real shame here. All that blood, sweat and tears expended by farmers to produce a high-quality raw product for the world and the businesses charged with taking that product to market, despite massive salaries and head office costs, failing to turn a profit.

It’s a wake-up call for all primary producers. Whatever vehicle they use to get their valuable produce to market, don’t take it for granted that the processing and marketing parts of the chain are being smart or efficient or adding any value whatsoever. 

Make sure. Read the company reports, attend the meetings. Ask questions. Don’t fall for the spin. 

To use the colloquialism, ‘keep the bastards honest’.

There’s too much at stake in 2020 – and beyond – to allow such largesse and waste to go unchallenged.

More like this

It’s All A1 at A2

A2 Milk Company interim chief executive Geoffrey Babidge says it will be business as usual for the premium brand milk processor.

A2 eyes higher sales, profits

A2 Milk expects strong first half sales supported by brand and marketing investment in China and the United States.


Milestone for Ahuwhenua

Next month will see the first finalists competing for the prestigious Ahuwhenua Trophy in horticulture announced at Parliament.


New levy to hit farmers

The New Zealand Agricultural Aviation Association (NZAAA) is up in arms about a proposed new safety levy.

Safety mindset must change

WorkSafe NZ is calling on farmers and other rural businesses to treat health and safety as more than a compliance issue.

Milk price may go higher

Dry weather around New Zealand could restrict milk supply and squeeze global dairy prices higher, says Westpac’s senior economist Michael Gordon.

» The RNG Weather Report

» Latest Print Issues Online

The Hound


Your canine crusader reckons it is ironic – and highly appropriate – that Shane Jones’ $3 billion electoral slush fund…

Funny names

Over the years, a mate of the Hound’s has always been quick to point out to him people in roles…

» Connect with Rural News