Industry reaction

Federated Farmers vice-president Andrew Hoggard says a criticism of exiting Fonterra chief executive Theo Spierings is that he did not connect with “the standard farmer” as well as predecessor Andrew Ferrier.

A search has started for a replacement for Dutchman Spierings, who leaves at the end of the year. Asked if there was an appetite among Fonterra farmers for a New Zealander to be the next chief executive, Hoggard, who is a Fonterra shareholder, said it might be helpful for “appearance’s sake” but was not necessarily the answer to Fonterra’s issues.

“In the long term you still want that good bugger who connects well with farmers and that doesn’t necessarily have to be someone from New Zealand. But that connection, that empathy, does need to be in the skill set.” He said farmers had half-expected Spierings’ resignation this year because he had been in the job seven years.

Economist Cameron Bagrie said Fonterra’s business performance in China had resulted in wealth destruction instead of creation for its shareholders and the New Zealand economy. The former ANZ chief economist, now managing director of Bagrie Economics, said serious question marks were hanging over whether Fonterra was delivering the goods for the New Zealand economy. “Fonterra is a bellwether not just for the dairy sector but for the broader economy. New Zealand is not a big economy, we don’t have too many big firms.”

Craigs Investment Partners head of private wealth research Mark Lister said Spierings had had some left-field issues with which to deal.

“If you look at its performance in terms of earnings growth, dividend growth, share price growth, I don’t think you’d hold it up as a shining light among performers in the last decade,” Lister said.

“That’s not necessarily a reflection on him. You could blame management for some of the strategic errors in China but also a lot of it is a function of the nature of the business, the industry and the fact they are such a big business. It’s really hard to turn that ship around when you want to effect change.”

Lister said Spierings had had to contend with droughts, huge commodity price volatility, the investment in China, and the food safety recall issue that led to the $183m settlement with Danone.

“Not all of those things are Fonterra’s fault.”

EMA chief executive Kim Campbell said Spierings had done some “fine work”.

“He’s had seven years there of some very fine work but like in every large complex organisation, not everything works. People have to get used to the fact that when you take risks in business, not everything works out,” Campbell said.

Campbell said Spierings’ work with Fonterra’s ingredients business was “an outstanding story that needs to be told”.

“I would defy anyone, anywhere in the world to tell me a more profoundly successful launch than their ingredients business.”