Fonterra looks ahead to 2019

South Canterbury’s dairy industry has experienced a turbulent year, with an increasingly ‘‘impaired’’ public perception adding to its woes. However, Fonterra’s head of farm source for Canterbury, Marlborough and Tasman, Charles Fergusson plans to take the bull by the horns in 2019.

The biggest hurdle of 2018 – the outbreak of Mycoplasma bovis – proved devastating for individual farmers, businesses and the wider community, and Fonterra posting its the first-ever loss this year also kept Fergusson busy.

‘‘The year 2018 has been a tough one for the co-operative,’’ he said. ‘‘Farmers have had a tough time with M. bovis, environmental and water quality issues.’’

Last week, the deluge of burning criticism aimed at the industry continued unabated through reports that an antibiotic-resistant E.coli strain had been found in three Canterbury rivers.

Blame was laid at the feet of the dairy industry. An increasing number of dairy cows were accused of releasing untreated sewage into the environment thus creating a ‘‘major health hazard’’.

While accepting some blame for past mistakes, Fergusson believed the dairy industry had been given a bad rap.

‘‘Cows do not wee and poo directly into the waterways. They do their business in the paddock on the grass. Farmers have also invested heavily in effluent treatment in recent years.’’

The accusation that the dairy industry kept too many cows was not true, he said.

Water quality played a critical part of the Fonterra set up and there were programmes in place, such as Tiaki and 50 Catchments, to ensure farmers improved water quality. ‘‘Farmers have already spent over $1 billion on environmental improvements,’’ Fergusson added.

Fonterra had 99.6 per cent of farmers’ significant waterways fenced and farmers were making considerable riparian planting efforts, he said.

The co-operative’s Tiaki programme, which involves sustainable dairy advisors providing support, tools and services to farmers, has helped it reach its fiscal year (FY18) target of 1000 individually tailored farm environment plans.

‘‘We support regional councils and communities in determining the environmental limits for their region, and we expect farmers to comply with regional requirements.’’

Fonterra’s partnership with the Department of Conservation, called Living Water, focuses on finding solutions to enable farming, freshwater and healthy ecosystems to thrive side-byside, Fergusson said.

‘‘We’re half way through the 10-year partnership and we are working on five Living Water catchments around the country.’’

Fergusson said through Fonterra’s 50 Catchments initiative, it had committed to help restore 50 catchments by working with community stakeholders.

Dairy had a huge flow-on effect in South Canterbury’s communities by providing employment, and both direct and indirect business opportunities to local communities.

Fergusson said despite growth in the industry now slowing after years of flourishing, dairy still represented an attractive proposition for investors.

‘‘There are significant benefits to dairy farming. It has a high certainty income. Its products are in incredible demand both domestically and internationally.’’

Fergusson warned prospective cooperative members though that sustainability was key. Land that was not part of an irrigation scheme will also not be considered.

He said Fonterra felt it had disappointed its farmers in the past year by not meeting its commitments and posting a $196m loss in the last fiscal year.

‘‘We have let down our farmers. More can be achieved for them and we need to be more transparent. But there are plans in place and we will improve our performance.’’

Those improvements were already being implemented with new changes such as a new chief executive being elected.

At November’s annual financial results announcement, Fonterra’s new chief executive, Miles Hurrell, declared a three-part plan to improve performance. This included taking stock of business, getting the basics right and ensuring more realistic forecasts for the company.

‘‘Our priority is to see farmers’ futures protected,’’ Fergusson said. ‘‘Fonterra is set up to pay farmers a milk cheque.’’

‘Farmers have had a tough time with M. bovis, environmental and water quality issues.’ Charles Fergusson