19 Oct 2020

Fonterra Shareholders Council pledges reform

3:55 pm on 19 October 2020

An organisation set up to help farmers deal with Fonterra has pledged to lift its game.

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Photo: rnz

This followed the second of two reports about the Fonterra Shareholders Council.

Both reports were written by former senior public servant, Dr James Buwalda.

The Fonterra Shareholders Council has in the past been derided as "more lapdog than watchdog."

Criticism of the organisation intensified during two years of financial losses by Fonterra, second of which was huge.

Buwalda's first report, in June, found the council was unable to force directors to be more open about capital investments and financial performance, and this had to change.

The second report, which has just been released suggested ways of getting this done.

"The council must ensure its members are fully informed of (Fonterra's) performance. It must hold the board to account," the report said.

In response to this, council chairman James Barron pledged reform, starting with visits to farmers in each ward which elects representatives, to understand farmers' views and expectations.

"One clear realisation is that we need to spend more time listening to and talking with our shareholders," he said.

"We need to use that as a valuable resource to communicate to the board (of Fonterra)."

He said in the past the council had spent a lot of time understanding the board of Fonterra and communicating that to shareholders.

"There's a recommendation in the report that we cease communicating (the board's) strategy - that's a key part of it."

Barron said this change would reverse the flow of information - it would no longer go downwards, from board to farmers, but would go upwards, from farmers to the board.

He said most changes could be achieved without any need for major constitutional reform, and he foresaw a strong future for the council.

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