“Govt won’t fix Fonterra’s problems” – so ran the strapline on the NZ Herald’s weekly “The Business” last Friday.
And thousands of Fonterra’s farmer-suppliers, reading the article which quoted Agriculture Minister Damien O’Connor, almost certainly would have sighed with relief.
Who would want this government to “fix” their industry? Look what happened to the oil and gas exploration industry after Energy Resources Minister Megan Woods applied her “fix” to it.
Or what’s happening to the trucking industry after Transport Minister Phil Twyford applied his “fix” to the fuel taxes.
The dairy industry is already only too familiar with government “fixes” as the Ministry of Primary Industries tries to rid the country of Mycoplasma bovis (while blaming errant farmers for its introduction, at the same time playing down any fault on the part of Biosecurity).
So Fonterra will just have to soldier on without O’Connor and his officials moving in to offer solutions to Fonterra’s problems.
O’Connor accuses the industry of “having done a lot of silly things over the years and at times lost sight of the fact they need to retain a social licence”.
Some cow cockies might have shouted back: “What about the $14 billion the industry earns on export markets?”.
O’Connor argues that Fonterra’s owner-suppliers need to consider constitutional issues very carefully along with any changes to Dairy Industry Restructuring Act, the 2001 legislation governing the industry.
The Act is currently under review and a discussion paper is in preparation.
The fundamental flaw in the original legislation (which the authors intended to facilitate the evolution of higher-earning, value-added product business) was the imposition on Fonterra of the obligation to allow open entry and open exit to farmers, and to supply milk at the regulated price to competitors.
That obligation meant the co-op had to outlay vast capital sums on, in particular, milk driers to cope with seasonal peak production, and the rapid increase in production as farmers lifted the numbers in their dairy herds.
So, some with a clear sight might argue Fonterra’s most acute structural problem stemmed from a government ”fix” in the first place.
Please, no more fixes of that kind.
Better news on another front: Fonterra has appointed an independent Sustainability Advisory Panel to guide it as it strives to be a world leader in sustainably produced dairy nutrition.
The panel features a diverse range of experts including:
- Sir Rob Fenwick (Chair), who co-founded the NZ Business Council for Sustainable Development and was the first New Zealander knighted for services to both business and conservation.
• Paul Gilding, a Fellow at the University of Cambridge’s Institute for Sustainability Leadership, author and former global head of Greenpeace.
• Aroha Mead, a Research Associate specialising in Mātauranga Māori and indigenous knowledge.
• Bridget Coates, Chairperson of White Cloud Dairy Innovation, Director of Tegel Group Holdings Ltd and former Director of the Reserve Bank of New Zealand.
• Hugh Logan, who chaired the Land and Water Forum and has 40 years’ experience in natural resource management.
• Michelle Pye, owner of large scale agricultural business Pye Group and member of the Fonterra Shareholders’ Council.
Fonterra CEO Miles Hurrell says the panel represents one part of the co-op’s wider strategy to build sustainability into everything it does.
“Some of the world’s biggest sustainability challenges are around food and we believe, like many, that the global food system must shift from being part of the problem to becoming a greater part of the solution. Our co-op is already taking action to support healthy environments and strong communities, but we know we must do more.”
The cooperative needs to be mindful of the need to keep up with – even better, to be one one step ahead of – the Government, which announced the next stages of its fix our water problems today.