Fonterra unfair short term thinking

Fonterra is again being criticised for being unfair to businesses which service and supply the company :

Fonterra has extended by two months the time it takes to pay suppliers, from 30 to 90 days, saying that matches what it does in other countries.

It has also asked them to cut their charges, which it says is about boosting efficiency.

But the suppliers are hitting back, warning Fonterra risks a backlash in the provinces.

National’s Whanganui MP Chester Borrows said the cooperative had asked for a 10 percent cut in what suppliers charged it, but was now asking for 20 percent in some cases. . .

When times are tough it’s normal practice to ask companies you do business with to sharpen their pencils but there are consequences if you’re too tough:

The supplier, who did not want to be named, said Fonterra was generating animosity and rupturing relationships going back years.

“A lot of the businesses break their backsides, we put ourselves out, we give them priority – well, that loyalty is disappearing,” the supplier said.

“A lot of contractors won’t give the same loyalty and drop everything to help them out when their plant goes down, because they are not good creditors.

“The other thing I say is because they are paying their bills three months late, that scares me – what guarantees does Fonterra give all their creditors that they’re good to pay their bills on time?” . . .

A friend in PR tells me the practice of expecting 60 or 90 days credit before bills are paid isn’t unusual but she’s able to invoice before work is finished. That isn’t possible with, for example, electricians who are called on at short notice when something goes wrong.

When the milk price is so low we expect the company to become more efficient but doing so at the cost of other businesses is short-term thinking.

In our business we treat people as we want to be treated. Fonterra should do the same.

45 Responses to Fonterra unfair short term thinking

  1. Brown says:

    “… which it says is about boosting efficiency.”

    That’s often newspeak for we want cheaper because we don’t want to pay as much as we used to. In tough times you may expect that to be a valid point and I can respect it when raised honestly. I worked for many years in an industry where the powerful customer constantly thought of ways to screw you while smiling and saying we were part of the team. You get to a point eventually where its just not worth it and I know efficient contractors that were told by their accountants to give up the supposed team work because its costing you money. At least they had options, I pity those that don’t.

  2. Will says:

    I bet they pay their rates and power on time. Pricks.

  3. Dave Kennedy says:

    I remember that we had a similar conversation over subcontractors finding that payments were being delayed by larger entities just because they could. This also becomes another “too big to fail” scenario where smaller businesses are sacrificed to ensure the survival of larger companies. Many smaller businesses operate with little equity and are dependent on getting paid promptly for every job, they are the first to go for no fault of their own.

    It is also interesting to note that the 17 Fonterra staff earning over $1 million have kept their jobs and salaries while 523 middle and low level staff are being sacked.

    This has been happening in the state sector for some time too and many health and education providers have been collapsing or falling apart because of demands to provide the same level of service for less, while top management have their salaries increased well above inflation:
    http://www.stuff.co.nz/national/health/76927843/cashstrapped-womens-centre-turning-people-away

    https://www.tvnz.co.nz/one-news/new-zealand/southern-dhb-commissioner-called-in-to-cut-costs-gets-pay-increase-1400-a-day-q01719

    Before it collapsed Solid Energy built a castle for an office and the failing CEO was allowed to go on gardening leave while he continued to earn his $1.3 million salary.
    http://www.stuff.co.nz/business/8398173/Former-Solid-Energy-boss-still-on-1-3m

  4. Dave Kennedy says:

    Interesting that I got a thumbs down for the last comment. I would be interetsed to know what was factually wrong 😉

  5. Bob says:

    Supposing Fonterra customers decide to pay their invoices after 60 to 90 days. Ah – the power of a monopoly!

  6. JC says:

    I see I mentioned here 15 months ago Fonterra is acting like a failed company and recommended competition as an answer.

    Well, time has passed and things have got worse and I also see back in 2009 I recommended here Fonterra change its focus..

    “Dairy farming and Fonterra’s future should be in milk, by products, real estate, tourism, science etc.. not just producing milk for the lowest cost.”

    That isn’t Fonterra’s fault entirely because its shareholders refused to allow it to go beyond their own narrow focus to their own disadvantage now. I’d also add that its biggest failure is to not have significant foreign ownership which would have supplied the expertise to develop a more diversified future.. it really needed several orders of magnitude separation from the Govt of the day.

    The pity of it is Fonterra has become the Crafer family imbroglio through enforced xenophobia, lack of vision and foreign expertise. Make it insolvent, sell it for half its value to people who know what they are doing and rebuild.

    JC

  7. Mr E says:

    “When the milk price is so low we expect the company to become more efficient but doing so at the cost of other businesses is short-term thinking.”

    I disagree with some of the the sentiment regarding Fonterra in this post.

    Fonterra is owned by shareholders, and many shareholders/suppliers will face a loss this year.
    It is fair and reasonable to expect Fonterra to take prudent steps to reduce costs.

    During this downturn, development will be low, Fonterra is likely to have an excess of suppliers. It is possible that some of those suppliers have become costly and inefficient if they have grown as Fonterra has grown during the good times.

    One way to shed suppliers would simply be – don’t call them back. But then you will never know who the most efficient suppliers are and who will be flexible to help carry the cost of downturn.

    I think Fonterra is taking prudent steps to cut costs. I think cutting cost is a expectation on them.

    Will it cost Fonterra in the long run? I doubt it. It sounds like new suppliers are lining up to take the place of unhappy ones. Some of those suppliers might be worse. Some of them might be better.

    That is business.

    One thing is for sure, if Fonterra did nothing to improve efficient, the criticisms of it would be 10 times worse.

  8. Dave Kennedy says:

    “That is business”

    Mr E, I guess if by “business” you mean any unethical means to remain solvent, then you are probably right. If you mean big businesses sacrificing smaller ones to manage their own mistakes, then I guess that must fit your world view too.

    It seems that you are not a supporter of true markets and also support the idea of monopolies and duopolies dominating markets so that they can screw their suppliers and contractors. Supermarkets use their dominance to push down prices for fruit and veges so that orchardists end up employing migrant workers below the minimum wage to wring out a profit. This is just good business?

    No wonder our economy has become a low wage one that feeds just a few at the top…and you obviously support the fact that farmers and contractors make sacrifices while Fonterra management still suck in their million dollar salaries.

    I feel another good grief coming on!

  9. TraceyS says:

    ^ there you go, Mr E, seems it is all your fault!!!

  10. Mr E says:

    Dave,

    You seem to be claiming that Fonterra is acting unethically.

    I see nothing unethical about informing suppliers of new trade terms. Trade terms that are permitted in our laws. Suppliers don’t have to agree, or trade on this basis. They can go elsewhere. They can choose.

    That is not unethical. That is business. Trade is not a one way street, like you seem to suggest.

    “It seems that you are not”….. Here we go, off on one of Dave’s judgemental rants, where he sprays a heap of unhelpful incorrect judgements. Rants that are targeted at the person, not at the topic. Keep it clean Dave. It is not that hard you know?

    Fonterra is not a Monopoly, nor is it a duopoly. Particularly when it comes to contracting many of the services, some contractors have many many many other options. Electricians, for example, have options other than Fonterra. They can hook up solar panels instead….

    Your ‘sound bite’ attacks really have nothing to do with the topic at hand. They show the flaws in you argument, which any monkey could see.

    “you obviously support the fact that farmers and contractors make sacrifices while Fonterra management still suck in their million dollar salaries.”

    I think during tough times good management becomes more valuable.

    I think during tough times most people make sacrifices. I reckon Fonterra management is making sacrifices.

    It seems you don’t like to see big salaries. But it is a business reality that attracting high quality managers requires more cost.

    It is not surprising that the Green party does not seem to understand that attracting quality personal is not easy.

    And yes I am looking forward to more of your ‘good griefing’. The dramas of the Greens, always entertain me.

  11. Mr E says:

    Yes Tracey,

    Forget about Fonterra – Mr E is to blame. That seems to be Dave’s style.

    I think it is low grade politics. But each to their own I guess.

  12. Mr E says:

    *personnel*

  13. Dave Kennedy says:

    Mr E are you actually telling me that contractors currently working for Fonterra can readily shift to another large dairy company?

    I do admire your dogged loyalty to a flawed system. Other commenters here have empathy for the contractors and Bob (3:49) also refers to Fonterra’s monopoly of the dairy industry.

    Apart from Tracey I think you are on your own regarding the idea that big businesses shafting smaller ones should be considered accepted practice. Tracey also supports the idea of farmers shouldering the bulk of the responsibility for their debts.

    As Ele said:
    “In our business we treat people as we want to be treated. Fonterra should do the same.”
    To me that is an ethical approach and I’m now doubting your own ethical understandings.

    We need a more principled Government that is better focused on sustainable economics then this “boom and bust” one that encourages speculation over investment.

    http://localbodies-bsprout.blogspot.co.nz/2016/03/what-would-really-happen-to-farming.html

  14. Dave Kennedy says:

    Mr E I did love the irony of you suggesting that my saying “It seems that you are not” is a “judgemental rant” then a little later you say:
    “It seems you don’t like to see big salaries” chuckle 😉

    You are right I don’t like to see such huge salaries being paid to managers who have failed to deliver to those who actually employ them. Obviously you would have been comfortable when the US banks paid bonuses to their managers immediately after their taxpayer bailouts.

    Why on earth are you such a corporate lacky?

  15. Mr E says:

    Dave,
    Are you actually telling me electricians can only work in large milk factories?

    Straw man Dave, straw man.

    As are your monopoly claims. Fonterra has no monopoly over using electrical contractors.

    There was also little irony in our statements.

    Your judgements were incorrect and unhelpful.

    My judgements were bang on. And actually not judgements. You are often banging on about big salaries negatively. Then proudly referring to keeping Wwoofers in a caravan.

    Importantly this dislike shows a disconnect between the real world and the Greens. It seems to me the Greens are just not qualified for the roles they seek.

  16. Dave Kennedy says:

    Mr E, I don’t know how many times I have to explain that most of what i share here is not just something I dreamed up but reflects what is happening in the “real world”. There are all manner of businesses (contractors and suppliers) that depend on Fonterra for a good amount of their income as they are often the major business in many communities.

    If you read more widely you would also realise that the dairy industry also has specialist suppliers who would not be able to find an equivalent client elsewhere.
    http://www.stuff.co.nz/business/industries/77671077/row-grows-over-fonterras-decision-to-take-time-paying-suppliers

    Apparently Chester Burrows agrees with me about the salaries too:
    http://www.stuff.co.nz/business/farming/77724768/fonterra-executives-told-to-examine-their-own-pay

    Perhaps you can show me who shares your views regarding Fonterra’s new approach to payments and its management’s bloated salaries, you are certainly a lone voice on this thread at the moment.

    I guess the term “real world” has different meanings for different people and your world view has some very brutal, corporate aspects 😛

    I’m glad I belong to a party that supports ethical business and evidence based policy.

  17. TraceyS says:

    Dave

    “Tracey also supports the idea of farmers shouldering the bulk of the responsibility for their debts.”

    Farmers who borrow money ARE responsible for their debts. It’s not an “idea” it is a fact. It applies to everyone.

    (Regarding your “also” claim – I don’t support that and you know it. You are resorting to juvenile dirty tactics again and I don’t like it. I do not do this to you. Stop it please).

  18. Mr E says:

    Dave,

    “Perhaps you can show me who shares your views regarding Fonterra’s new approach to payments and its management’s bloated salaries, you are certainly a lone voice on this thread at the moment.”

    Perhaps you can tell me what my “lone voice” is? You are doing what you do to so many other contributors on this blog. You are attributing views to me that are not mine.

    I think it is an unpleasant style of debating. Some might say unethical.

    “I’m glad I belong to a party that supports ethical business and evidence based policy.”

    You seem unhappy that Fonterra is looking to shed cost. You seem unhappy that Fonterra prefers to ask all contractors to do their part.

    What would you prefer? Fonterra to lay off some contractors or to ask them all to do their bit?

    When redundancies happen NZ law requires that companies consider alternatives first. So often that involves offering/considering pay cuts too. It is because that is the morally correct thing to do.

    Your comments have me wondering about you ethical compass.

    I should also point out that Fonterra has a responsibility to shareholders to manage the company finances well. It is a moral and ethical responsibility to deliver.

    For Fonterra Management that pressure is two fold. Not only do they have to achieve good results to shareholders, but shareholders are suppliers. They have a responsibility to suppliers to run efficiently. To ensure that factories are run at the lowest possible cost for the highest possible output.

    It seems you have not considered these points because they are devoid from your comments. And that keeps suggesting to me that the Greens just are not fit to govern.

    Regarding Managerial salaries of Fonterra, I don’t have a view. There is a lot to consider when thinking about their Salaries. We are not privy to those details so any judgement would be a poor one.

    We can say for sure that upper management have global attraction, and are benchmarked against other global organisations who Fonterra are competing with for this type of personnel.

    Do you think upper management should not be benchmarked globally? Perhaps they would be better benchmarked against Wwoofers? Ones that stay in caravans?

    Ethical indeed.

  19. Paranormal says:

    As for your judgmental rants above, how are Fonterra Managers responsible for the global dairy price? As Mr E says, its now those managers really earn their salaries in the best interests of their shareholders.

    Also, as mentioned many times before, what we, and more particularly populist politicians, think of salary levels in Fonterra is irrelevant. It is the shareholders that decide if the salaries are justified or not. Otherwise it is none of our business.

    Ever hear of a thing called risk management? its something all businesses must do, particularly where their fortunes are tied to a few major clients/customers. Do you really think those specialist suppliers skills are not transferrable to other industries?

    Finally DK asked “Why on earth are you such a corporate lacky?”

    Why DK, are you such a Marxist bully boy? Is it a requirement of Green politics?

  20. Dave Kennedy says:

    Tracey, I do understand your point but in finding a solution it just means that the joint perpetrators to our dairy crisis wipe their hands of the problem. Bill English was saying in Parliament yesterday that the farmers borrowed the money, it is their problem and if many end up having to sell up to foreign buyers, so be it (paraphrasing).

    The Government openly pushed the fact that they wanted dairy exports to double and the only way that could happen was through increasing production. The Government also invested in irrigation schemes to support intensification. Banks were also complicit in that they encouraged and made money available so that farmers could expand their herds.

    This combined strategy meant that the low input, pasture based farming that existed before shifted to a higher input model. When milk price was $8.40 this worked well but now it is $3.90 and the larger herds can no longer be sustained. Incomes are going to drop substantially but even with lower inputs farmers are not going to be able to service loans. It is now looking as at least 50% of dairy farmers are going to be in serious financial difficulties by the end of the year.

    Farmers are being blamed for their situation when it was actually a scenario supported by the Government and the banks. More needs to be put in place to manage a transition to a more sustainable model and not allow a sudden collapse of the industry and foreign take overs. The Solid Energy crash occurred for similar reasons and the workers and West Coast communities have suffered tremendously, it is going to be far bigger with dairy because of all the supporting industries and businesses that were set up to support a greatly expanded dairy industry that obviously wasn’t sustainable.

    Legally farmers are responsible for their debts, I agree, but morally they should not shoulder it alone. The Green Party believes in just transitions in these circumstances to minimise the human tragedies that will inevitably result. The Government and the Banks are just showing sympathy and crying crocodile tears while leaving the farmers to suffer the consequences.

    Mr E, I’m sorry I do not share your dog eat dog world view (it’s appalling). As many other commentators have said, if Fonterra wants to build good will with its contractors and suppliers, treating them so callously won’t do it. I bet they won’t be tolerating late payments. I do get the impression that there is a good deal of panic within the industry and given the number of people who will suffer from its demise there needs to be a much more open strategic approach. As I said earlier this has all the signs of a Solid Energy collapse and whole businesses and communities will suffer as a consequence, but on a much bigger scale. Already Southland’s GDP has taken a dive.

    I would have expected management to take a lead in the recovery not continue to suck tens of millions of dollars to maintain their lifestyles as the farmers they serve lose their livelihoods. The global trend for paying CEOs huge salaries has no moral or practical rationale, it is just manipulation and greed that supports it. To argue that a CEO will perform better if they earn $6 million rather than $2 million is pure nonsense and I bet there are people currently earning $250,000 who would step up to one of those positions and do just as good a job.

    It is the farmers that take the risks and yet they are relying on the decisions of those in top management. I find it bizarre that such well compensated individuals could have allowed such a disaster to occur (they also botched the management of botulism scare). Even I knew that commodity prices were going to crash from my general reading (demand in China was slowing with its economy and production was increasing in Europe, the US and China itself) it was inevitable and it was like watching a slow train wreck.

    Interestingly Wwoofing is based on goodwill and establisjhing good relationships. I treat my wwoofers like family (as you would have seen from my reviews) and while I only expect 3-4 hours of work in return for food and board etc and yet many will continue working more hours just because they want to. Treating people respectfully produces benefits both ways.

    “As for your judgmental rants above, how are Fonterra Managers responsible for the global dairy price?”

    Paranormal, I am surprised that you didn’t know that Fonterra made the decision to manage the majority of sales through the global auction process (Global Dairy Trade) rather than provide to customers at fixed prices. Many were concerned at the risks involved because in other commodity markets it has involved volatility and businesses and countries have been burnt.

    The GDT auctions did provide some great returns but what was predicted has happened when supply exceeded demand. If Fonterra had spread risk and had more fixed price supply agreements then the highs would not have been so great but we wouldn’t be in our current situation.

    Fonterra isn’t responsible for the global dairy price but it is responsible for minimizing risk and operating in a way that protects the incomes of their farmer shareholders. They made the decision to gamble in a risky environment (like choosing high risk investments over low risk investments) because of the lure of high returns and it crashed.

    What is now happening all too often around the world is that the business risks for the largest corporates have become public responsibilities (or the too big to fail scenario). Private banks were bailed out with public money, SCF was bailed out with taxpayer funds and in the case of Fonterra there is every possibility that the management may be supported by the Government to some extent and the farmers, the taxpayers and suppliers have to suck up the costs.

  21. TraceyS says:

    Dave. Finding a solution requires, first and foremost, an understanding of the problem’s root cause.

    I’m not sure that you have it.

  22. Mr E says:

    Dave,

    “our dairy crisis”

    ” communities have suffered tremendously, it is going to be far bigger with dairy”

    “there is a good deal of panic within the industry”

    Many banks are predicting recovery, and they must be right because the Greens are announcing crisis, panic and suffering.

    Over reaction is not a characteristic I seek in leaders. We need level heads in leadership and I am sorry Dave, but I don’t see that in you.

    All markets go in cycles. Dairy is no different. I am wondering, given your pride in predicting a decline (cycle), when will see a recovery? Oh great guru.

    I am interested in your wwoofer remarks. In November you said “I would say that their 4 hours a day gets at least $20 dollars an hour of services in return and that doesn’t include our recognised hospitality.”

    Now it is 2-3 hours. What a moving target you provide.

    In Nov I said:
    “4hours * 7days = 28hours?

    Free accommodation (without avoiding IRD private boarding tax) =$254?

    Pay rate = $9/hour (tax free)?”

    If it is 3 hours it is $12.1/hour. If you disagree I am interested in your calculation.

    Regardless, the way Wwoofing is promoted by some, it comes across as exploitation of the vulnerable to me. I have raised this a number of times with you. Have you done anything about it or turned a blind eye?

    If keeping people in a caravan as repayment for work, is how you expect your family treated, I am pleased we are not related, and Greens aren’t Governing.

  23. Dave Kennedy says:

    “Finding a solution requires, first and foremost, an understanding of the problem’s root cause.”
    Tracey, I agree and the root cause that I have described is just repeating what I have heard from within the sector and the well researched article in the North & South that included an interview with John Luxton, ex chair of Dairy NZ.

    I would be interested to know what you think the root cause is and where you get your information from.

    Mr E, for goodness sake, I am no guru, as I keep telling you this isn’t the Greens view of the situation, it comes from the industry itself. The current industry prediction is 2-3 years (you better tell them that they are over reacting):
    http://m.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11597798

    It is interesting that when you are losing the substantive argument you resort to the personal and your obsession with wwoofers extends to lying and dishonesty (4 hours is the recommended hours from the organisation, but I don’t mind if it is less).

    You are more than welcome to come and see our caravan, I have had lots of compliments about it and friends stayed in it while it is in its current situation by our crib in Waikawa. Now our kids have left home our wwoofers generally stay in the house. 😉

    You really are a sad individual if you are more concerned about the wwoofers that voluntarily stay with us and leave glowing reviews but think that the farmers facing foreclosure is just business and the million dollar Fonterra salaries are justified.

    Good grief!

  24. Mr E says:

    Dave,

    “Mr E, for goodness sake, I am no guru”

    Apologies – no guru. Noted.

    “The current industry prediction is 2-3 years”

    The current industry? What is “the current industry”?

    “your obsession with wwoofers extends to lying and dishonesty ”

    I quoted your words exactly Dave. Please qualify your claims of lies and dishonesty.

    “You are more than welcome to come and see our caravan”

    I think I have seen it? It is an old Sprite, orange and white. (Correct me if I’m wrong)
    I would never keep staff in a caravan as payment for work, old, orange or not. I guess people have different standards for staff.

    Frankly speaking I am concerned about the woofing industry as a whole more than your involvement.

    Many people who are exploited do so voluntarily. Often they don’t realise they have been exploited.

    Volunteering does not excuse exploitation.

  25. Dave Kennedy says:

    Mr E, give up on the wwoofer thing, I am quite aware of the potential for exploitation, despite the rules I’m sure exploitation exists, it happens everywhere:
    http://www.stuff.co.nz/business/farming/dairy/67577313/Wages-breaches-found-in-dairy-farm-investigations

    I do note that you are totally focused on personal attacks because you have no defense for your earlier crazy comments regarding Fonterra’s operations. I guess we can label you as a Fonterra apologist 😉

    And do you question the United States Dairy Club chairman Ejnar Knudsen’s view that the slump in prices will probably last 2-3 years?

    If you do dispute it who or what is your alternative source, Bill English?

    I wonder if you will respond with another attack on my little caravan or will you actually produce an actual argument? …Chuckle 😉

  26. Mr E says:

    Dave,

    “give up on the wwoofer thing, I am quite aware of the potential for exploitation,”

    That is pretty sad. I was hoping my concerns would mobilise you. I was hoping you would join me in trying to improve the situation. As a political person within the industry, I would have thought you were in a perfect position to improve things. But no. You want silence. You want real people with real concerns to “give up”.

    Sad. Very sad.

    So when you were saying “the current industry” you were referring to Knudsen? He is hardly “the current industry” I am sure we can both agree.

    Interestingly in your link you have ignored the prediction by ASB that returns will be $6/kgMS next year. Why is that? Why would you ignore half of the story and only cite the bit that suits your negative agenda?

    Why indeed.

    I don’t care too much for your “little” caravan. I do care for the tourists returning to their countries with stories of work resulting in caravan accomodation. Little old caravans.

  27. Dave Kennedy says:

    True to form, as predicted 😉

    So the ASB is your industry guru, who would have thought.

    As for “my” negative agenda, how about reading all the reports and reviews that are out there in abundance from a variety of sources (including that lefty institution the Reserve Bank).

    As for your nasty little comments about our caravan, just how low and desperate can you get.

    You’re a sad, sad man, Mr E. 😛

  28. Mr E says:

    Dave,
    “So the ASB is your industry guru”

    Nope.

    There are mixed forecasts regarding the future payout Dave. I consider them all. You seem only to accept and promote the worst. I don’t think that is what leaders do.

    And I didn’t say anything nasty about your caravan. You said it was little. I said it was old. Why do basic facts hurt you so?

  29. Dave Kennedy says:

    Mr E, as I have done before, I will let others judge the intent of you remarks and why you even bothered to say them. You seem to have no self-awareness or shame 😛

    I think others will also judge the accuracy of our past remarks, do you remember me voicing concern over a year ago about the danger of putting all our economic eggs in a commodity market? I remember you telling me I had no idea what I was talking about. We should have this conversation in a year’s time to see the strength of feeling regarding the million dollar salaries and the confidence around milk price prospects.

    However the thing that really gets me is your callous disregard for the suffering caused by this very real crisis.

    “When the milk price is so low we expect the company to become more efficient but doing so at the cost of other businesses is short-term thinking. In our business we treat people as we want to be treated. Fonterra should do the same.”

    I’m on Ele’s side on this one!

  30. TraceyS says:

    “…all our economic eggs in a commodity market…”

    We do?

    Can you quantify “all”, Dave?

  31. Mr E says:

    Dave,

    “I will let others judge the intent of you remarks and why you even bothered to say them. You seem to have no self-awareness or shame :-P”

    I wouldn’t comment here if I didn’t expect my remarks to be judged.

    I hope you are aware your comments get judged by others too. You are a public figure after all. This is public domain (by the grace of Ele).

    I am happy with my self awareness. I have noted that others here have supported me in this thread. And others have tried to hold you to account for your comments.

    “I think others will also judge the accuracy of our past remarks”

    I copy and pasted our remarks, you suggested dishonesty, I queried that. You ignored my query. I agree, people will judge that.

    “do you remember me voicing concern over a year ago about the danger of putting all our economic eggs in a commodity market?”

    I’m pleased you bought that up…. Yes how could I forget, your repeated silly remarks about dairy being all eggs in one basket. And attacks on the government because your consider it responsible for this nonsense claim (looking forward to your quantification by the way)

    Then you have gone on the defence of contractors, working for Fonterra because they have what? Lack of diversification?

    Do you ever get the irony of your politics?

    “However the thing that really gets me is your callous disregard for the suffering caused by this very real crisis.”

    I asked this question that you ignored, along with a plethora of others: “What would you prefer? Fonterra to lay off some contractors or to ask them all to do their bit?”

    When you finally answer that question sensibly, I think you will find yourself wanting.

  32. TraceyS says:

    “Fonterra isn’t responsible for the global dairy price but it is responsible for minimizing risk…”

    Whose risk?

    Surely you don’t consider that either the Government, Fonterra or the banks are responsible for managing the risks of separate private companies?

    If they assumed such a responsibility then they would effectively be directing those entities and could be liable for their commitments. That is why they cannot tell farmers how to manage their risk. Doing that would be crossing a line. It is a governance responsibility and must be kept separate between separate entities.

    If you understood this then you would have a better understanding of why things have turned out the way they have. The problem at the core is the personal responsibility taking of those in governance roles. You may argue that some lending should not have occurred but, in fact, no lending could occur without borrowing.

    There lie the brakes you are looking for. At the level of the individual. Your politics don’t let you fully appreciate this. I understand that. But your suggested tools of retrospective regulation and price hedging are only temporary band aids – if that – and will have no long-term impact on the heart of things.

  33. Dave Kennedy says:

    “What would you prefer? Fonterra to lay off some contractors or to ask them all to do their bit?”
    See Ele’s comment.

    “Surely you don’t consider that either the Government, Fonterra or the banks are responsible for managing the risks of separate private companies?”

    All parties should be involved in managing risks, don’t dump it all on the farmers, Tracey. The whole dairy growth agenda was a joint one and I don’t agree with you that everything should be dumped on the farmers.

    Who would have believed that I would be defending farmers on this blog against Tracey and Mr E. I guess that is the difference between harsh neoliberism (the survival of the fittest in a dog eat dog world) and compassionate politics. Our strength should lie in our sense of community and while one should always take responsibility for one’s actions in most instances there are shared responsibilities for negative outcomes. The Government, the Banks and Fonterra need to accept that thy have partial responsibility for the plight of many struggling farmers and communities. I don’t understand why you want to dump it all on farmers.

    Unbelievable!

  34. TraceyS says:

    “All parties should be involved in managing risks…”

    Yes I agree. Their own risks.

    “The whole dairy growth agenda was a joint one…”

    Yes, but the players manage the risk of their own entity. That’s their duty.

    “I don’t agree with you that everything should be dumped on the farmers.”

    That’s great because I never said it should.

  35. Mr E says:

    “Who would have believed that I would be defending farmers”

    You are? Fonterra is owned by 13,000 farmers. You are attacking Fonterra. You are attacking farmers business. It seems common territory for you to venture into.

    This dog eat dog world you talk of does not exist. You are using an unpleasant phrase, in an unkind way.

    You seem to want a business world where all succeed, regardless of the logic or economics behind their enterprise. There is no doubt that this type of world would lead to extreme greed, and poor communities.

    Of course we have seen this all before. The subsidise of the 80s were a compassionate attempt to help farmers. Only it wasn’t really compassion. It lead to inefficient resource use as was apparent when subsidise were removed.

    I fear organic farming is undergoing the same problems. Pseudo-Subsidise are rife meaning some farmers are not learning the principles of efficient business.

    Things like Wwoofing mean some farmers are getting cheap/free labour without understanding the need for tax payments, health and safety, time sheet management, etc.

    I feel sorry for some organic farmers as I think there are some who want to hold them back from growing as the rest of the world grows.

    There are exceptions of course. Some organic farmers are getting it right – and good on them. I hope they protect their very niche markets.

  36. Mr E says:

    “See Ele’s comment.”

    ‘When times are tough it’s normal practice to ask companies you do business with to sharpen their pencils’

    ????

    🙂

    I have worked for quarterly payments before. Payments after work was delivered. The overdraft was extended, which costs, but it was no big deal for me.

    If you want the work you you go the extra mile. There is nothing to stop it being factored into charges. For me it was simply a money shuffle.

    Some people like to ‘cry over spilt milk’ but I say ‘no big deal orange peel’.

  37. TraceyS says:

    Dave, why would you say that you are defending “against” me when I am actually agreeing with many specific points you make?

    I’ll not be reviled into accepting your whole argument though. I don’t agree that it is complete, balanced, or well-founded.

  38. Dave Kennedy says:

    Tracey, I apologise if I have not appreciated the points where we agree, perhaps you need to spell those out a little more.

    Mr E, I find it both amusing and concerning that your world view is largely shaped by your own experiences:
    “I have worked for quarterly payments before. Payments after work was delivered. The overdraft was extended, which costs, but it was no big deal for me.”

    Have you ever thought that some businesses may not enioy your financial resilience. Your idea that suppliers should just accept lower payments and take out overdrafts to manage delayed payments may work in the short term, but we are talking 1-3 years. Your “no big deal orange peel” is sadly dismissive and insensitive when many businesses are wanting to protect the jobs of their employees and are running very close to the wind.

    Ele was essentially saying that Fonterra probably expects prompt service and payment but to treat others shabbily is counter productive. Also the management were very dictatorial about it, why couldn’t they have met with contractors and suppliers and worked out some thing in a more cooperative way?

  39. Mr E says:

    Dave,

    “Mr E, I find it both amusing and concerning that your world view is largely shaped by your own experiences:”

    I find it amusing and concerning that you conclude what someone’s overall views are based on one quote. A quote that says nothing about someone’s overall views.

    “Have you ever thought that some businesses may not enioy your financial resilience. ”

    Have you ever questioned whether Fonterra should be trading with businesses that aren’t financially resilient?

    Other large primary industry processes pay on 60-90 day basis. Why attack Fonterra when it does so? It is not unusual behaviour.

  40. Dave Kennedy says:

    “: Have you ever questioned whether Fonterra should be trading with businesses that aren’t financially resilient?”

    Yep, but currently most have become less resilient because of Fonterra.

    I’m currently in the UK with unreliable wifi.

  41. Mr E says:

    “but currently most have become less resilient because of Fonterra”

    That is a long bow to string. There are many ways resilience may have improved remaining suppliers. Some may have diversified. Some may have OD loans that allow them to contract for bigger jobs. Those remaining will know they are competing less.

    Resilience will likely have improved in many ways.

    Forget about the poor wifi, think about your sore arms from the flapping or paddling…. How could you type in such a state?

    🙂

  42. Dave Kennedy says:

    “Forget about the poor wifi, think about your sore arms from the flapping or paddling…. How could you type in such a state?”
    I am attending my mother in law’s funeral, Mr E, and did need to be here fairly quickly.

    You do lack a little compassion. 😛

  43. Mr E says:

    Apologies for the untimeliness of my remark Dave.
    And my sympathy for you loss.

    Take care.

  44. Mr E says:

    *your*

  45. Dave Kennedy says:

    Apology accepted, Mr E.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

%d bloggers like this: