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Change at the top in Fonterra

Greetings Readers

The surprise of the pending appointment of a new CEO for Fonterra gives a significant shove to connections with industry politics and policies of the past and hopefully gives room for the development of new management styles and abilities resulting in success for the beleaguered co-op.

It has been the nature of the dairy industry to use and discard its directors and executives none to gently with regular frequency. Many individual ambitions have been dashed - even squandered – in the drive for improved payout performance.

The surprise being that as a result of how close the CEO selection process progress was held by the directors caused speculation that the job was Mr Norgate’s for the taking. The lack of leaks would also suggest that Fonterra is becoming a disciplined company in managing its decision making.

Much will be read into Mr Ferrier’s previous experience and whether that fits him for the position. Will his experience managing a relatively smaller retail goods manufacturing company or a Canadian based sugar marketing company be suitable preparation for his new international position?

In many respects this current change has many similarities with the improved management performance of the NZ Dairy Group during the 1990’s. An outsider with no dairy industry experience took NZDG from a middling company to, in its final year, one that was out performing most of its contemporaries.

Fonterra shareholders have good reason to be optimistic that their directors have appointed a CEO who will improve the company’s performance and take advantage of marketing opportunities. But what he cannot do on his own is change the conditions of the international dairy and financial marketplace which is currently the biggest influencer on reduced farm gate prices.

Let’s hope he gets a good team working and he meets suppliers’ expectations of improving payouts.

Good Farming

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