John Wilson stands down as Fonterra chair

July 27, 2018

John Wilson  has announced that he is standing down as Fonterra chair immediately and will retire from the board in November.

In an email to shareholders he said:

  • I have made the difficult decision to stand down as your Chairman to recover from a recent serious health scare.
  • Within the last month I have undergone a significant surgery.
  • I have made a very good recovery and am well but need on-going treatment.
  • I have been humbled by the support of my fellow Directors, and after deep discussions with them and with my family, I have decided to stand down as Chairman as of today and will retire from the Board at the Annual Meeting in November.
  • It has been a privilege to serve you as Chairman and give something back to this great Co-operative that continues to give my family and me so much.
  • As many of you will know from experience, governance roles are incredibly rewarding, but equally demanding on the individual and their families.
  • Continuing as Chairman when I cannot put my full energy and attention into the role is not appropriate.
  • I look forward to spending more time back on the farm with Belinda and the girls.
  • Long standing director, John Monaghan has been selected by the Board as the new Chairman of Fonterra.
  • John, who has been on the Board since 2008, has been closely involved in the process to appoint a new CEO to Fonterra and will now be responsible for advancing this appointment with the full involvement and support of the Board.
  • I know you will join me in putting your full support behind John and the Board as he leads the Co-operative through this critical period of CEO transition, the DIRA review, farmer flexibility, and the vision and purpose work alongside the Shareholders’ Council.

Fonterra is facing criticism from outside but the shareholders who are the farmers who supply the milk can’t argue with the second highest payout and John Wilson must get credit for that.

It is New Zealand’s only internationally rated company and the country ought to be proud of it.

It is constrained by some of the conditions of the DIRA regulations and the review is an opportunity to fix that.

A serious health scare is a serious business and he is doing the right thing for himself, his family and the company by standing down as chair. I wish him a full and speedy recovery.

Fonterra is in the process of appointing a new chief executive.

It isn’t always ideal to replace both the chair and CE at the same time.

But if a board is functioning properly and all board members are pulling their weight there ought to be no problems with new people in both positions.

John Monaghan served as chair of the Shareholders Council and has both the skills and experience to lead Fonterra well.

 


Rural round-up

June 25, 2018

Mycoplasm bovis can transfer to sheep, goats, deer, pigs and poultry – Keith Woodford:

Currently, there is a fervent ‘behind-the-scenes’ debate as to whether eradication of Mycoplasma bovis from New Zealand is feasible.

It is well over a month, possibly close to two months, since the international Technical Advisory Group (TAG) voted six to four in favour of eradication being feasible. This would have been based on information supplied to them by MPI and assessed over a telephone hook-up. New evidence since then provides further complexity and concerns.

First, there is extensive evidence from overseas that Mycoplasma bovis can transfer between species and that it can infect sheep, goats, pigs, deer and even poultry. Strictly speaking, this is not new evidence as it was sitting there all along in the scientific literature and easily found. However, the implications of this within the New Zealand environment have not been considered to date. . .

A killer worse than M bovis – Nigel Malthus:

A cattle disease prevalent on 100% of New Zealand farms is much more serious than Mycoplasma bovis, a veterinarian says.

Lincoln University Dairy Farm veterinarian Chris Norton told farmers at a recent focus day there that though M. bovis dominates the news, another disease — Johne’s — affects more farms and kills more cattle.

Johne’s was discovered first in Taranaki 100 years ago in one cow, Norton said. . . 

DoC explains game export process – Tim Fulton:

Deer and other game animal products are getting a new export process and the Department of Conservation (DOC) is trying to ensure exports aren’t stopped at foreign ports because of it.

Japanese border authorities last month stopped a New Zealand velvet exporter’s shipment at an airport because they did not recognise DOC’s approach to certifying legally hunted and farmed game animals.

DOC has been issuing certificates of export for deer, tahr and chamois products.

A new form letter from DOC director general Lou Sanson will list seven species of introduced deer plus Himalayan tahr, chamois and possums. 

They are introduced species that can be legally hunted and exported as trophies, velvet, fur and meat. . . 

Nats out building rural bridges – Annette Scott:

Life is not going to get easier anytime soon for rural New Zealanders, National Party leader Simon Bridges told a meeting of 300 people in Ashburton.

Bridges, as part of his Connecting with Communities regional roadshow, said increased intervention in people’s everyday lives and policies that will make it harder for regional businesses to operate are becoming reality under the Labour-led Government.

And changes to industrial relations law will directly affect regional economies.

The big increase in the minimum wage and amendments to the 90-day employment trial were prompting employers to think twice about taking on new staff. . . 

Nominations Documents Ready for 2018 Fonterra Board of Directors’ Election:

Nominations for the Fonterra Board of Directors’ Election open Friday, 6 July with an election to be held for three farmer-elected Directors.

This year John Wilson, Ashley Waugh and Nicola Shadbolt retire by rotation. They may all stand for re-election if they wish – none have announced their intentions at this stage. . .

Record entries for Hawke’s Bay Young Fruitgrower competition:

Eight of Hawke’s Bay’s top young horticulturists will face off in the Hawke’s Bay Young Fruitgrower of the Year competition in Napier on Thursday 28 and Friday 29 June.

This year’s entrants are:
Lisa Arnold, orchard operations assistant at Bostock NZ
Tom Dalziel, foreman at Mr Apple NZ
Ryan Gittings, York Group assistant manager at Sunfruit Orchards Ltd
Wade Miller, leading hand at Bostock NZ
Luke Scragg, senior leading hand at T&G
Philip Siagia, general orchard hand at Mr Apple NZ
Anthony Taueki, foreman at Mr Apple NZ
Lincoln Thomson, assistant manager at Sunfruit Orchards Ltd

Critical elements to maintain member loyalty in co-operatives :

To fully engage the members of co-operative and mutual enterprises, managers and directors of CME’s must understand their members wear four hats when engaging with their co-operative, according to a study conducted by researchers from The University of Western Australia.

The study analysed three Australian producer co-operatives including Co-operative Bulk Handling Ltd (CBH), Murray Goulburn Co-operative (MGC), and Geraldton Fisherman’s Co-operative Ltd (GFC), and examined the nature of member commitment and loyalty in co-operative and mutual enterprises (CMEs).

Professor Tim Mazzarol from UWA’s Business School and Institute of Agriculture says directors and managers of CME’s should recognise that members do wear multiple hats with which they engage with the enterprise. These hats are Investor, Patron, Owner and Community Member. . . 


Business not Minister’s business

June 14, 2018

NZ First MP Shane Jones has stomped with his clod hoppers where he has no business to be again:

Regional Development Minister Shane Jones has climbed into the leadership of dairy giant Fonterra, calling for chairman John Wilson to follow chief executive Theo Spierings out the door.

Jones said he told the company it should stop being political and instead focus on its business.

Says the Minister who uses personal attacks instead of polite discourse and ought to be focusing on politics not meddling in business.

They should focus less on interfering in politics and more on justifying the money they’ve lost overseas. I believe that they have become disconnected from the farming community.”

Jones said he had suggested to Agriculture Minister Damien O’Connor whether it was time to restructure the dairy co-op, and singled out Wilson for special mention.

Doesn’t he know that the Dairy Industry Restructuring Act (DIRA), under which Fonterra was created, is under review already?

The leadership of Fonterra, I believe, starting with the chairman, is full of its own importance and has become disconnected.”

He said there was an absolute absence of accountability for the “enormous amounts of dough” that the current chairman had presided over.

This sounds very like a minister full of his own importance presiding over a billion dollar slush fund with little accountability.

The CEO has gone, well that’s only one party of the double-Dutch we’ve had to put up with in Fonterra over the last nine years. I thoroughly believe this … that as the CEO leaves Fonterra, the chairman should in quick order catch the next cab out of town.

Double-Dutch? Is this a xenophobic reference to the retiring CEO Theo Spierings and past chair Sir Henry van der Heyden who stepped down nearly a decade ago?

“I’ve been bloody disappointed that Fonterra, in my view, the leadership has not accepted that there’s a new Government and there is a new narrative and I’ve had a gutsful of them believing they are bigger then what they really are.” . .

Believing they’re bigger than they are? That’s rich coming from the party with far more power – and voter money – than its voter support at the election entitle it to.

This sort of tirade does nothing to reassure  businesses which are already very wary of the policies and directions of the government.:

The time has come for the Prime Minister to step in and discipline her Regional Economic Development Minister who repeatedly seeks publicity by attacking business leaders, National’s Regional Economic Development spokesperson Paul Goldsmith said today.

“Business confidence in New Zealand is plummeting and the reasons for that are mounting.

“The Government’s low growth policies like higher taxes and stronger unions are causing businesses to hire fewer people and invest less in growth and it has them concerned about the future of New Zealand and who can blame them?

“Because on top of that you have a loudmouth Regional Economic Development Minister who’s putting his own ego and need for publicity ahead of the interests of New Zealand.

“Shane Jones’ attacks on Fonterra’s leadership are the latest burp from a man who is fast losing any respect he once had.

“He says Fonterra’s leadership is ‘full of their own importance’.  That sounds like a more apt description of himself.

“He even added he’s ‘worried about the absolute absence of accountability for the enormous amounts of dough that the current Fonterrra chairman has presided over’.

“This is startling hypocrisy from the same man who defended his own region getting the lion’s share of funding from his billion-dollar Provincial Growth Fund by stating ‘to the winner goes the booty’.

“Well it’s not his booty and it’s clear Shane Jones has no idea what accountability means.

“This Government has decided to spend $3 billion over the next three years on regional economic development, including roundabouts and church restorations. It’s critical the responsible is up to the job and focused on doing his job well.

“At the moment, all he seems good for is attacking business leaders whenever a few days have gone by without some of the media coverage for which he craves.

A friend who was at the KPMG breakfast at which Jones launched his tirade said it was entirely inappropriate, and a very poor reflection on the MP and the government.

Fonterra is a co-operative. The performance of the company and its chair are the business of its shareholders not an MP.

There is some dissatisfaction and there are concerns but this season’s  milk price is the third highest since the company was formed.

Shareholders could well be more concerned about the MP who has no business interfering in their business than the chair’s performance.

So Jones’s loose lips could well strengthen the position of Wilson who is up for re-election this year.


Rural round-up

June 3, 2018

Already-stressed farmers will need to use all resources available to cope with the added impact of mycoplasma bovis. Their personal resilience faces a severe test – Daniel Tisch:

The mycoplasma bovis eradication programme underway will challenge farmer resilience. Resilience addresses the return to normal after a shock.

The shock felt by farmers from culling their herds has been widely reported. From what we know about resilience, this initial impact will be followed by a recovery period, in which the mental and emotional state of farmers will be affected for years.

The incidence of depression, suicide and other mental health conditions will rise.

An average of one farmer every other week commits suicide in New Zealand and this rate increases during stressful times such as a drought. International studies of farmers highlight their vulnerability. Many countries have programmes to support farmer resilience.  For example, US-lawmakers are currently discussing The Stress Act for farmers.  . . 

Just get on with it farmer says – Neal Wallace:

Leo and Maite Bensegues aren’t really interested in how Mycoplasma bovis arrived on their South Canterbury farm last August.

It meant the destruction of 950 cows and 222 yearlings but the Morven sharemilkers do not dwell on those dark days.

Instead the Argentinian who arrived in New Zealand in 2005 with $728 to his name focuses on the future and a day in late June when his farm will be declared free of the disease and he can start preparing for the calving of his recently bought 700-cow herd. . .

MPI answers questions:

When did Mycoplasma bovis arrive in New Zealand?

All the evidence we have is that Mycoplasma bovis arrived in New Zealand in late 2015 to early 2016. Investigations are ongoing.

Why do you think this?

We have two lots of evidence. A genetic clock and our tracking and tracing activity where we identify and test animals on farms that have received cattle or other risk items from Mycoplasma bovis positive farms, like milk for feeding calves.

What’s a genetic clock?

Since we discovered Mycoplasma bovis in NZ in July 2017 we have been gene sequencing the disease to identify its genetic fingerprint. . . 

Leisurely trip with cows allows rubbish pick-up – Jono Edwards:

Dairy farmers across the country braved the cold yesterday to embark on a yearly stock pilgrimage.

In some areas, they were concerned about the travel and mixing of stock that came with Gypsy Day in the era of Mycoplasma bovis.

Taieri dairy farmer Philip Wilson was not too worried about the  threat of the infection yesterday as he moved a small herd just 3km down the road. . . 

Wilson, Spierings argue valid comparisons, value-add – Hugh Stringleman:

For the Fonterra Scorecard series Farmers Weekly sought an interview with chairman John Wilson and chief executive Theo Spierings, now in his last year at the top of the world’s second-largest dairy processor and trader.

Aspects of Fonterra’s historical performance, Spiering’s strategies, the dairy industry review and Fonterra’s most-recent downgrade in earnings and dividends were discussed. It was their only joint interview with rural media during the past seven years. Hugh Stringleman reports. 

Fonterra’s performance

New Zealand dairy farmers who supply Fonterra now receive better payouts than their counterparts almost everywhere in the world, chairman John Wilson and chief executive Theo Spierings say. . .

New directors elected to Horticulture NZ board:

Horticulture New Zealand’s Board welcomes new director Bernadine Guilleux and re-elected director Mike Smith, after four well-qualified candidates contested two vacant roles on the Board.

Horticulture New Zealand’s President Julian Raine was advised of the results by Electionz, which ran an independent voting process for the Board.

Welcome Bay kiwifruit grower Mike Smith offered himself for re-election and Bernadine Guilleux, marketing manager at Balle Bros in Auckland, is a first-time candidate. . . 

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Rural round-up

May 28, 2018

Dairy farmers are an easy target and not alone in environmental guilt– Lyn Webster:

 As a dairy farmer I hear a lot of criticism about the perceived environmental impact of farming animals on land, and this has made me extremely environmentally aware.

Everywhere I look I see the environmental impact of humans: people just moving around, eating, breathing and living their lives.

Every buying decision we make has an impact – whether it be food, clothes off the internet from China or an overseas trip. TV advertising incessantly tells us to buy more and more things to make us happy, to make our children happy and to tick off our bucket list.  

Big shops bring us zillions of dollar’s worth of colourful plastic shaped into seemingly desirable objects, many of which are discarded quickly in the shape of broken toys, cracked garden gnomes and punctured plastic swimming pools. . . 

Sharemilker protects his herd ahead of Gypsy Day – Gerald Piddock:

A nervous Calvin Lauridsen​ has done all he can to protect his prized dairy herd from Mycoplasma bovis ahead of next week’s Gypsy Day.

The Arapuni farmer is in the final stages of packing up and leaving the 138 hectare farm he and wife Nadine have 50:50 share milked with 440 cows for the past eight years.

All that is left on the farm are a few items of machinery and his dairy herd, which is being picked up on Monday , the same day Cabinet will make a final decision whether to try and eradicate the disease or shift to a management regime.

So far, the cattle disease has spread to 39 farms since July last year, including the latest addition of a dairy farm near Cambridge.  . .

There’s more risk on moving day – Hugh Stringleman:

Several hundred sharemilkers and their cows will move farms on Gypsy Day with extra time-consuming and costly animal health precautions because of Mycoplasma bovis.

The spread of at-risk properties shows precautions must be taken for cattle movements in all dairying regions of the country, DairyNZ extension general manager Andrew Reid said.

About 3000 of the nation’s 12,000 dairy farms have sharemilkers and the standard contract length is three years.

Therefore up to 1000 herds could move at the end of the season though more likely several hundred will move on June 1, Reid said. . .

Former Fonterra director calls for chair Wilson to resign – Jamiie  Grey:

A former director of Fonterra has called on chairman John Wilson to “move on” after what he said was the co-operative’s ongoing underperformance.

Fonterra this week issued its nine-month business update which featured a strong farmgate milk price but which also highlighted a downward pressure on the company’s earnings.

Taranaki-based Harry Bayliss, a founding director who served on the board from 2001 to 2006, sent an email to existing board members on March 31 calling for Wilson to step down. A spokesman for Fonterra said it had no comment to make. . . 

Getting the good oil in Central – Yvonne O’Hara:

This season’s long summer has resulted in a bumper harvest for olive growers in Central Otago.

Lowburn’s Stephen Morris, his wife Olivia and his in-laws Alistair and Sue Stark own Olive Press Central Otago (Opco) on the family’s vineyard, St Bathans Range, near Cromwell.

Mr Morris has been busy during the past three weeks cold-processing olives to produce extra virgin olive oil,

The good summer has meant the fruit produces more oil with a better flavour, and promises to be one of the best they have had. . . 

Droving journey highlights ongoing drought in Queensland – Sally Cripps:

When Jodie Muntelwit and PJ Elliott decided to put 1200 head of their cattle on the road last October, they imagined it would only be for a month or two.

Eight months later, the mob of mostly weaners, under the care of Ned Elmy, an offsider and Ned’s 18 dogs, is trudging towards home at Corfield, living on hope and whatever Queensland’s stock routes can offer.

The season didn’t give PJ and Jodie the break they’d hoped for on their country north of Winton last summer, and the 150mm single fall in March at Weeba and Enryb Downs brought a half-hearted pasture response from most of their paddocks. . . 


Rural round-up

April 2, 2018

Action call over any found to have illegally brought in ‘M.bovis’ – Sally Rae:

Consequences are needed if any farmers have put other farmers, animals and livelihoods at risk, let alone the New Zealand economy, DairyNZ chief executive Tim Mackle says.

Dr Mackle was responding to an announcement by the Ministry for Primary Industries yesterday that it had simultaneously executed search warrants at three locations as part of the Mycoplasma bovis investigation.

The New Zealand Herald reported there was growing speculation the bacterial cattle disease was introduced to New Zealand through illegally imported livestock drugs, and sources suggested Tuesday’s simultaneous searches were in Auckland and Southland. . .

Fonterra negotiating ‘roadblocks’ in China – Fran O’Sullivan:

Fonterra’s news that it was writing down its $774 million investment in Chinese infant formula company Beingmate by $405m inevitably dominated news headlines after the dairy co-operative announced its 2018 interim result to the NZX.

But that was eclipsed when chairman John Wilson announced the seven-year reign of his chief executive Theo Spierings was in its final phase.

It was a brutal press conference. . .

Food for thought: How to secure New Zealand’s food supply in the face of a changing climate – Tess Nicholl:

We take for granted the bounty on offer at our supermarkets, but destructive cyclones and the hottest month in 150 years are turning attention to how long New Zealand can provide fresh food for its growing population. Tess Nichol investigates.

On the outskirts of Dargaville, Andre de Bruin has been growing kumara for the past two decades.

He produces 40 hectares of the purple tuber annually, but last year his yield was halved thanks to what de Bruin calls a “perfect storm” — drought followed by unseasonal amounts of rain right before harvest.

“We had drought drought drought, then bam, floods,” he recalls. . .

Get the basics right – Sam Whitelock:

I come from a farming background and once I complete my rugby career I’ll be taking the lessons I’ve learnt from professional sport and applying them back on the farm. (Sam Whitelock, Farmstrong Ambassador)

Rugby has certainly taught me heaps about how to look after myself and handle pressure.

I reckon rugby and farming are really similar that way – there’s always targets to meet and results to achieve.

So how can you prepare for the ups and downs of it all? . .

Merino stud tour held in conjunction with awards – Yvonne O’Hara:

About 170 people took part in a two-day self-drive tour visiting eight merino studs in Central Otago earlier this month.

The tour was held in conjunction with the Otago Merino Association Awards, which were announced at a formal dinner in Alexandra on March 16.

The studs on the tour were Nine Mile Station, Malvern Downs, Earnscleugh Station, Matangi Station, Little Valley Station, Matarae Station, Stonehenge Station and Armidale Merino Stud.

Lunch was at Earnscleugh Station’s woolshed . .

 Art Basel Hong Kong 2018: Loro Piana’s cloud-like “The Gift of Kings” exhibition 590 panels of the world’s finest wool make for a jubilant immersive experience   – Alessandro De Toni:

In conjunction with Art Basel Hong Kong, Loro Piana—one of the world’s most prestigious cashmere and luxury fabric manufacturers—pays homage to its most renowned material known as The Gift of Kings.

It’s quite a bold name but it represents an incredibly fine, feather-light and rare wool sourced by Loro Piana through a 30-year-long collaboration with a selection of Merino sheep breeders in Australia and New Zealand. This material, measuring only 12 microns (one thousandth of a millimeter), is far finer than cashmere and only available in very limited quantities, meaning it’s quite extraordinary that it was used as the principal source material for this installation.


Good news from Fonterra & Synlait

March 21, 2018

Fonterra has announced an increase in the forecast milk payout:

Fonterra Co-operative Group Limited today increased its forecast Farmgate Milk Price for the 2017/18 season to $6.55 per kgMS and announced a full year forecast dividend range of 25 – 35 cents per share with an interim dividend of 10 cents per share.

Chairman John Wilson says the ongoing strong global demand for dairy and stable global supply are continuing to support global prices, particularly for the important Whole Milk Powder category.

“Farmers will welcome a forecast cash payout of $6.80 – $6.90, which would be the third highest in the last decade. This is also good news for New Zealand as it represents around $10 billion flowing into the country’s economy. However, we are very aware of the challenges many of our farmers are facing this season with difficult weather conditions impacting production.

“While the global supply and demand picture remains positive and we expect prices to stay around current levels, we will be watching for any impact on market sentiment as spring production volumes build in Europe,” he added.

New from China isn’t all good though.

Fonterra’s Greater China business continues to perform well overall but the Co-operative has re- assessed the value of its Beingmate investment so that it reflects a fair value at this point in time.

Commenting on this decision, Mr Wilson says the Board has assessed the carrying value of Beingmate at $244 million and therefore taken an impairment of $405 million. . . 

Synlait Milk has announced a record half-year profit:

Synlait Milk  has reported a half year net profit after tax (NPAT) of $40.7 million for the six months ending 31 January 2018.

This is compared to $10.6 million for the same period last year (H1 FY17).

Synlait’s Managing Director and CEO, John Penno, says the strong earnings growth of $30.1 million has been driven by increases in manufacture and sales of our highest margin products, as well as improved margins and earlier sales of our ingredients products.

“The growth trajectory of canned infant formula has continued with total consumer packaged volumes almost tripling from the same period last year and up 36% on the second half of last year,” he says.

“Our relationship with The a2 Milk Company™ continues to strengthen where we remain their exclusive manufacturer for the important Australia, New Zealand and China market.”

“We have also renegotiated our supply agreements with New Hope Nutritionals and with Bright Dairy, which provides for four-fold volume growth over a five-year period. However, we don’t expect this to impact sales until FY19,” he says.

In the six months to 31 January 2018, Synlait has invested $34.5 million in capital expenditure throughout New Zealand. The major components of this were the Synlait Auckland blending and canning facility ($11.2 million) the new wetmix kitchen at Synlait Dunsandel ($18.4 million). Synlait also established a new research and development centre in Palmerston North. . . 

This is good news for farmers and the wider economy.

The anti-dairying movement gets a lot of attention, much of it based on mis-information and emotion, but that doesn’t change the importance of the industry as a major export earner.

 


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