Dairy industry at a ‘critical point’, admits farming leader
says Coull. “But that’s fine, that’s why we’re here. In all of this I’ve seen a positive and that’s the strong interaction from our shareholders. It tells me our co-operative is alive and well.”
Asked if the board respects the council, Coull says the relationship has “developed and matured somewhat“.
“To the extent that when decisions are made on certain aspects of the business that affect our farmers, the board and management are coming to council for a view.”
But he’s not sure that “genuine respect“has always existed.
On another recent headline, Fonterra’s gagging injunction against former director and shareholder Leonie Guiney, Coull would not be drawn, other than saying the situation was “really unfortunate“and “unique”. Guiney, who left the board last year, has subsequently filed a defence and intends to sue the board for defamation.
In a bid to restore confidence in the cooperative, the council has commissioned an independent report on whether its farmershareholders are better off today by being part of Fonterra than they were before it was formed 17 years ago, and where the company has allocated capital and how well it has been used.
Terms of reference are being drawn up now and a professional firm hired for the work.
The study is to be completed by the end of this financial year, says Coull.
But the study won’t look at Fonterra’s investment capabilities.
While there’s genuine concern about Fonterra’s performance as the national champion it was promoted as, there’s also “some political motivation` behind it, says Coull. “That’s why we need to do this piece of work because there’s a lot of misinformation around. “I saw financial commentators trying to compare interim results with full-year results. Sorry but that’s Financial 101. “There’s no correlation between the balance sheet at interim and at full year (because of the seasonality of the business). It’s quite irresponsible.” Coull says shareholders need to be given some confidence the company is “on track“. But he questions the zeal with which it is being criticised for its overseas investments. “The dairy industry exports 96 per cent of what it produces and it will always be in that position. At some point we had to broaden our horizons and go outside the Commonwealth for sales. “I’ve been to Sri Lanka which the (then) Dairy Board went into in 1978. Back in those days that would’ve been a scary proposition. Now we have a business in Sri Lanka which has 60 per cent of market share in that country with a population of 26 million. Chile is an another example. Duncan Coull
“Is it acceptable that parts of the China strategy are not working. No, it’s not.
“I get asked about accountability. But until the board makes a decision that it’s no longer in Beingmate, the accountability is ongoing.
“They’ve got to stick with this and they’ve got to turn this thing round pure and simple.”