Building Dairy Confidence.Wednesday, Mar 26, 2003
Twelve candidates standing for three director vacancies on the Fonterra Board of Directors probably indicates that there is some dissatisfaction amongst suppliers with the current direction of the cooperative and that its members are seeking change.
Is there a fundamental problem preventing Fonterra from being successful in the eyes of its shareholders?
Accepting that there are some dissenters who have never seen Fonterra as a sensible merger, have those who voted for the merger, reason to be dissatisfied with the structure they were handed as a result of negotiation and legislation?
The package passed to Fonterra appeared to contain all the assets and capabilities that had earlier resided with the merging companies, so why the current dissent?
It appears that indifference and dissent is developing in a growing group of shareholders who are loosing confidence in there ability to trust the cooperative to act in their interests. Not only in payout terms, but more recently in terms of seeking to match the farm production environment more closely to a perceived market prerequisite for purchase.
Fonterra Directors and Executives may have retreated back to a small company mindset which says, keep the cards close to your chest, say as little as possible and react only when provoked. When what is required is the large company ethos – perhaps best characterised by the navigation of a large super tanker. Detail the course to the crew and warn other shipping to get well out of the way because a big ship is passing through.
Fonterra has a responsibility not only to its suppliers but also the community at large to ensure that all are aware of the factors that will affect payout and the risks that are being managed on their behalf.
The continued churning of directors through the ballot box is not of itself going to improve supplier confidence.