Re­view aims to su­per­charge Fon­terra

South Waikato News - - FARMING - By GERALD PIDDOCK

A re­view into Fon­terra’s man­age­ment would im­prove in­ter­ac­tion be­tween share­hold­ers and man­age­ment and lift the co-op­er­a­tive’s per­for­mance, Waikato dairy farmer Garry Reymer said.

Reymer said the re­view was dis­cussed at the most re­cent round of share­holder meet­ings but man­age­ment and board rep­re­sen­ta­tives did not go into specifics. Th­ese meet­ings were of­ten heated as farm­ers wanted an­swers from the board over the dra­matic fall in milk price.

Fon­terra re­cently low­ered this sea­son’s fore­cast milk price to $ 4.40/ kg milk solids and an­nounced an open­ing fore­cast for the 2015/2016 sea­son of $5.25/kg MS.

The re­view was in­di­rectly an­nounced by Fon­terra in April when Jacqueline Chow was ap­pointed as Fon­terra’s chief op­er­at­ing of­fi­cer ve­loc­ity. This role would see her work along­side the man­age­ment team to ac­cel­er­ate per­for­mance across the co­op­er­a­tive.

In an emailed state­ment, Chow said she would lead a team, which in­cludes in­ter­nal and ex­ter­nal ex­per­tise to work with Fon­terra’s man­age­ment to boost per­for­mance across the co-op­er­a­tive and de­liver more cash to farm­ers.

‘‘ Ev­ery­thing is in scope and we’re tak­ing noth­ing off the ta­ble. Ve­loc­ity is a re-set of our busi­ness fo­cus­ing on per­for­mance, cre­at­ing value faster and gen­er­at­ing more cash for our farm­ers.

‘‘We will do this by step­ping up our game and the way we work, im­prov­ing ef­fi­ciency, low­er­ing cost and du­pli­ca­tion where we can, and im­prov­ing ef­fec­tive­ness and agility.’’

The re­view’s progress would be pre­sented to farm­ers at Fon­terra’s an­nual meet­ing in Novem­ber.

Reymer warned a re­view would not be with­out risk.

‘‘When you do a re­view like this, you start deal­ing with peo­ple and in­di­vid­u­als and that in it­self can be desta­bil­is­ing as well.’’

The Cam­bridge farmer said that could af­fect morale within the com­pany if that oc­curred.

The re­view was to be un­der­taken by con­sul­tancy firm McKin­sey & Com­pany.

Fon­terra Share­hold­ers Coun­cil chair­man Ian Brown said the re­view was about hav­ing an out­siders’ per­spec­tive look­ing over the busi­ness.

‘‘It’s good prac­tice, it’s pru­dent, and hav­ing an ex­ter­nal set of eyes look­ing over some­thing you’re familiar with, they may pick up some­thing you don’t see,’’ Brown said.

Waikato Uni­ver­sity Pro­fes­sor of Agribusi­ness Jacqueline Rowarth said she un­der­stood McKin­sey had been in­volved with Fon­terra since it was formed.

How­ever, she said the co­op­er­a­tive had ‘‘ put a ve­neer on this say­ing it is about [the project] Ve­loc­ity and are we nim­ble enough and all that sort of thing’’.

Any big re­struc­ture ought to ‘‘be a con­sid­er­a­tion of whether one com­pany can do ev­ery­thing it’s cur­rently do­ing’’.

‘‘Those of us in­volved in the farm­ing side see more and more risk be­ing put onto the farmer, and cost.

‘‘The whole dif­fi­culty of run­ning a com­pany this size as a co­op­er­a­tive – it’s too dif­fi­cult clearly oth­er­wise they’d have made a bet­ter fist of it.’’

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