If Wilson stays, it could hinder Fonterra’s cause

Afew days after Winston Peters’ first postCabinet press conference, he broke off an otherwise uncontroversial speech to bring up Fonterra. Speaking at a Federated Farmers event at Westpac Stadium in Wellington on June 27, Peters reminded the audience that ‘‘serious questions’’ should be asked of the dairy giant’s financial performance, pointing to what he claims is a $1.3 billion loss.

A fortnight earlier, Peters’ lieutenant, Shane Jones, created a deliberate storm by leaking comments he had made at a private event on the same issue, calling for Fonterra chairman John Wilson to ‘‘catch the next cab out of town’’.

While Peters’ comments were measured compared with ones he and Jones had earlier made, the fact that he is continuing to pursue the line should be a reminder, if any was needed, that Fonterra has become a political tool.

Having previously wavered over whether Jones was simply expressing his personal views, the Beehive claimed later that comments from Peters were simply the acting prime minister responding to questions when asked. But here the acting prime minister was, fanning the flames again. NZ First’s leadership is calling for ‘‘accountability’’ at Fonterra, and seems unlikely to let the issue go.

Wilson must think hard about whether continuing with the company will do it more harm than good. Nominations have opened for Fonterra’s board, ahead of its November annual meeting, at which Wilson is required to retire, but is free to seek re-election. So far he has not made public his intentions, but people around him have said he is determined to stand again.

As well as Fonterra’s search for a new chief executive, Wilson can credibly warn that there is no obvious replacement as chairman. Michael Spaans, the DairyNZ chairman, was widely tipped, but he died in late 2017. Wilson is also unlikely to want to be seen to be pushed out.

For this, he should not face undue criticism. Being bloody-minded is critical in farming. Between the weather, the uncertain value of your products and bankers doubting your ability to make good on your debts, any farmer who is not gripped by determination might soon decide not to get out of bed.

Wilson needs to consider, though, what is best for the company, by far the largest in New Zealand and one which exists at the behest of the government. Its strategy and financial performance have been questioned; in the public’s mind it is indelibly linked to environmental concerns; and, under his watch, Fonterra has been associated with food safety scares that could have damaged New Zealand’s reputation. His continued involvement threatens to become a lightning rod, used by opponents for any possible criticism of the company or of the dairy industry in general.

If he stands, it seems likely that Wilson would get the support needed to be returned. But he should realise what some farmers may not, that political change has swept New Zealand and now is not the time to be defensive.

Currently Peters and Jones can continue to call for ‘‘heads to roll’’ right up to the November AGM and probably beyond. If farmers side with their chairman, it could further damage relations with the urban majority and a Government with which farmers are not naturally aligned.

Media will continue to cover the story because the issue is tangible, as well as it being highly unusual and inappropriate for ministers to make such comments about private business. It is the political equivalent of blood sport.

If Wilson was to take his leave, NZ First would be forced to debate the detail of Fonterra’s strategy if it wanted to keep the story alive, something it is hardly equipped to do. Even if it were to do so, few outside the industry would pay much attention.

The stakes are high for Fonterra and the economy. Already there have been suggestions that, as part of a review of the legislation under which Fonterra operates, the company may be forced to spin off its brands business and focus on commodities.

While there could possibly be merits in this argument for farmers seeking a low-risk return, New Zealand would probably be worse off in the long term. Brands are becoming an increasingly global business, and an independent New Zealandbranded food company would seem likely to be quickly swallowed by a global giant against which Fonterra hopes to compete.

If he was to accept his time was up, Wilson might take the heat out of the argument and allow Fonterra’s future to be debated constructively. By seeking to stay on at the company for which he has worked hard, he may bring unwanted attention on Fonterra and attract intervention that is not in the interests of anyone.

If Wilson was to take his leave, NZ First would be forced to debate the detail of Fonterra’s strategy if it wanted to keep the story alive.