Promise CompromisedWednesday, Apr 16, 2003
Casual conversation with a number of South Island dairy farmers found them expressing substantial concerns with Fonterra’s performance and policies. Major concern centred on the cost/price of shares and the formula for the allocation of peak shares and the upfront payments demanded to cover increasing production.
These Canterbury farmers were very conscious of the apparent advantages that the Westland Co-op had chiselled out for West Coast producers. A higher payout and a lower share value – seemingly a contradiction – but significant in terms of the individual producers cash flow.
All expressed agreement with the importance of farmer ownership of Fonterra but were now questioning if the massive industry restructure had not delivered a bastard cooperative entity far removed from the ideal expected by voters for the merger.
The un-expressed fear seemed to be that the application of the arbitrary valuations and performance assessments being produced by the corporate financial wizards of international accounting firms were in fact working against the interests of Fonterra’s owners and producers suggests that Fonterra has some distance to travel before suppliers will accept that their priority interests really do rate ahead of corporate perfidy that has become the norm in the so much corporate business of recent times.
Much weight is being put on this years crop of director nominations in the forthcoming Fonterra board elections. However with such a large number presenting and little in the way of realistic policy being able to be articulated by the candidates suppliers are captured by the thought that individually that they can change nothing anyhow.
Not a good perception of a structure that promised much but is now struggling to deliver on the expectations it created.