Does Fonterra need to change?
Waikato University’s Professor of Agribusines Jacqueline Rowarth told Nine to Noon Fonterra was trying to do everything – supplying as well as branding and marketing – and there should be a major rethink of the structure.
“It’s too difficult to be milk supply, processing, branding and then the marketing of the brands at once, as well as expanding overseas.”
Past president of Federated Farmers’ Southland Russell MacPherson told the programme the business needed to be better run and simplified. . .
Fonterra is often cited as a good model by people wanting reform of the meat industry.
I don’t think it’s the best model for milk or meat. That the milk industry is following the meat model with more new processing companies being set up shows the single dominant company isn’t what all suppliers want.
There is competition for raw milk and the growth of new companies shows farmers want it.
Would there be so much criticism of Fonterra if the milk price was higher? Possibly but they wouldn’t be as strong.
Fonterra’s dividend was lower last year because the milk price was higher. The milk price is well down this year but losses on stock processed from last year’s high priced milk that was sold on this year’s market has eroded the dividend this season.
That is difficult to argue with that reasoning.
But the measure of a business is how it performs in tough times and it is fair to ask why Fonterra isn’t doing better.