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The Comparative Other

Greetings Readers

Tatua’s announced payout will be uppermost in the minds of Fonterra’s suppliers today.

The train of thought in most Fonterra farmers minds will no doubt be that with another $2 per Kg of payout farming life would be that much better – in fact remarkably better!

Why can’t everybody become part of the astute and elite 132 member Tatua company and leave the depressing aspects of Fonterra behind, they will perhaps be asking?

Comparisons are said to be odious and to a large degree the difference between the two payouts is simply reflecting the difference between the two companies. Throughput, resources, geography, technology, commodity products, specialist products, distribution, market position and market share.

Commentators may theorise on big versus small, co-operative versus corporate, competitive versus monopoly, bundled versus unbundled and so on but the fact is that Tatua has a payout of $5.60 because that is the figure after market realisations less costs. No competitor in Tatua’s markets wanted to sell for less so Tatua has this year attained a comparatively superior payout.

In a normal competitive environment where a small trader upsets perceptions of success and viability about the large trader, the large trader is advised to limit the damage to reputation and well being by whatever means are available to protect the company’s future welfare.

Tatua has become the “comparative other” for Fonterra and as such is likely to be an object of obsession to both Fonterra executives and suppliers.

Ten percent payout difference may have been tolerable but fifty five percent is extreme.

Advice to Tatua could be similar to that recently given to the All Blacks. Be skilled and aggressive on the playing field but be ever so humble off the field.

Experience shows that in time success can even abandon the most worthy.

Good Farming

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