No surprises from Fonterra
Fonterra shareholders have good reason to expect a no surprises policy and some whip-cracking over the financial performance from new chairman John Monaghan.
Why? Because he said that’s what he expects of New Zealand’s biggest company — back in 2006 when he was the tough-talking chairman of its shareholders’ council and castigating Fonterra for not being more profitable.
Back then, he said a “competitive” performance was just not good enough and that shareholders and the economy expected a “superior” innings from the near-monopoly dairy juggernaut.
Milk payout was $4.10kg milk solids in the 2005-2006 dairy season and returns from value-added products contributed 25c/kg to the payout. About 70 per cent of Fonterra’s farmer owners did not make an operating profit that year and the economy was $400 million short of the previous season’s payout delivery. Monaghan said at the time he operated on “a culture of absolutely no surprises”.
“I don’t have time for those who are not prepared to put a view on the table but then want to talk about it over coffee. I expect people to be totally upfront.”
The new chairman, who succeeds John Wilson, who announced his resignation recently for health reasons from the Fonterra board after two terms as chairman, said back in 2006 that shareholders were hard taskmasters who had high expectations for Fonterra.
“We are in a unique position as shareholders. We supply the raw products but we also supply the capital, so we have a real vested interested in this co-operative performing. For many farmers this is their only investment,” Mr Monaghan told the NZ Herald just five years after Fonterra had been created to be a national champion from a controversial industry supermerger under special enabling legislation.
Fast forward to 2018 and Monaghan is taking the helm of a company under fire from its shareholders and the Beehive for capital losses believed to top $1 billion through its China investment strategy, its debt level and weak dividends.
Monaghan, an Eketa¯ huna farmer with dairying interests in the South Island, has yet to speak publicly since his selection was announced last week.
In 2006 he said if he had a blood test he was confident it would “return positive for dairy politics”.
His late father Jack chaired at least five dairy co-operatives in the Wairarapa when dozens of dairy companies were sprinkled around the country.
“I was delighted to learn that John Monaghan had been appointed to the role of chairman of Fonterra,” said Kieran McAnulty, Labour Party List MP in Wairarapa and Junior Government Whip.
“It is just marvellous that a true Eketa¯ huna man is at the helm of one of our most important companies. On a personal note, I’m pretty stoked to see a cousin of mine achieve such a feat. I look forward to working with John as an MP based in the Wairarapa electorate, in my role on the Primary Production Select Committee and Chair of the Labour Party’s rural caucus.
NEW Fonterra chairman John Monaghan from Eketa¯ huna.