7 Nov 2019

'Some mud needs to be thrown' - farmer at Fonterra AGM

7:45 pm on 7 November 2019

Fonterra shareholders are frustrated and want accountability after turbulent times for the country's biggest enterprise.

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Photo: Photo / AFP

About 200 farmers gathered in Invercargill for the dairy giant's annual general meeting.

The co-op recently posted a $605 million loss for the last financial year, and didn't pay dividends to shareholders.

Farmer shareholders acknowledged that today was going to be tough for Fonterra's leaders during an Q and A session.

"Thank you for putting your crash helmets on, thank you for making the courageous and difficult decisions. You must have been standing around after the last board meeting - petrified is the wrong word, cause I don't that's at all what was in your eyes, but you must have known that the mud was going to be thrown at you and rightly so, some mud needs to be thrown. We need to learn from the past," one shareholder told the crowd.

There were calls for Fonterra's board of director's chairperson John Monaghan to step down.

"I encourage the directors, when you vote for the chair after this meeting or the next meeting you have, that you vote a new chair in. Change is needed, we've lost a lot of money, we've got a co-op that's hugely at risk," another shareholder said.

"If competitors set up at the moment, we'll lose milk. We want to be more proud of our business. Currently at the moment it's very hard to be a proud Fonterra shareholder."

But Mr Monaghan said the blame shouldn't fall solely on his shoulders.

"Looking at the past, I guess we're all responsible. We're all responsible in one shape or another," Mr Monaghan said.

"But I guess one thing would be just to cut and run, the other thing is to stand up and do something about it. If I look at the change that this co-op has undergone, you now have a board that is totally rejuvenated. Other than Leonie and myself, the rest have spent three years or less."

The co-op wasn't broken, but it did need to change, he said.

Fonterra has announced a shift in strategy, saying it's focused on extracting more value from local milk production, moving the focus away from overseas ventures.

It also has a new chief executive and chief financial officer.

Fonterra chief executive Miles Hurrell said the co-op was progressing well with its new strategy.

"I'm feeling energised and excited about the year ahead and the future for our cooperative. It's been a tough year, but we're building the right team and laying the foundations for a successful future," Mr Hurrell said.

"We know we need to deliver for you, our farmer owner, our unit holders and all [of] New Zealand. I know I have 10,000 farming families and 20,000 employees right behind me and [I'm] determined to make that happen. You, me, us, together."

Southland farmer Ian Smith said he was waiting to see if the new strategy would be a success.

"The proof of the pudding will be eating ... we will see what comes out. In the end, the world market will determine what is happening and it's how we place ourselves in the world market," Mr Smith said.

One farmer shareholder congratulated Fonterra on making difficult decisions.

"The decision not to pay bonuses and a pay freeze for salaries over $100,000, that would not have been an easy decision to make and I think we need to acknowledge it," they said.

"The decision demonstrates some ownership of Fonterra's issues and would also have had an impact on our own staff's personal cash flows."

South Otago farmer Peter Glaister remained hopeful for a better future.

"Fonterra will have their ducks better lined up as far as their strategy," Mr Glaister said.

"We'd like to see a dividend again, but the milk price is the most important by far and we can't really criticise the current milk price. It's looking like $7."

Shareholders said they would keep a close eye on profits and progress to see if Fonterra's actions would speak louder than their words over the coming financial year.