Long road ahead for Fonterra to rebuild confidence, says shareholder

An agriculture commentator and Fonterra shareholder says the dairy giant has a long way to go to rebuild confidence among farmers.

The co-op reported a loss of $605 million for the 2019 financial year on Thursday, and confirmed there would be no dividend payment for farmers.

A focus on repaying debt has seen it sell assets, including iconic ice cream company Tip Top, and freeze salaries and bonuses for its highest-paid employees.

It is also closing its Kapiti Coast cheese factory with the loss of at least 65 jobs, and signaled more job cuts could be on the way as it looks to implement a leaner structure and culture.

Agri-analyst and dairy farmer Jacqueline Rowarth said farmers were shocked at what had been happening at the co-op, and how much money had been lost.

Jacqueline Rowarth said farmers had been shocked at how much money had been lost.
Jacqueline Rowarth said farmers had been shocked at how much money had been lost. Photo credit: Newshub

She said a new business strategy by Fonterra was good news, but questioned why it had taken so long to identify the focus on New Zealand as a competitive advantage.

"We would have liked to have seen some of these things happen before," she said.

Changes to the management team have also been announced, including the departure of Fonterra chief operating officer for global operations, Robert Spurway.

However Dr Rowarth said there was still a lack of confidence from many farmers.

"One of the things shareholders feel is that this has been going on for a long time.There's a lack of confidence in the people who have been around for a long time, because why didn't they stop what was happening?"

Waikato dairy farmer Lloyd Downing is hopeful better times are ahead.

"Farmers are pretty upset, and rightly so, but at the end of the day it is what it is. We've got to move forward and hopefully the directors have got the message."

Federated Farmers dairy chair Chris Lewis said while the big loss was expected, most farmers would be disappointed - and is looking to Fonterra for a brighter future.

Chris Lewis said farmers are disappointed and hoping for an improvement from Fonterra.
Chris Lewis said farmers are disappointed and hoping for an improvement from Fonterra. Photo credit: Supplied

He is happy with the new strategy, however said there was a lot of work to be done.

"It resonated with me, but at the end of the day the only thing we want is performance," he said.

"It's not just around better milk prices and dividends, but around the culture of the company."

Lewis said the priority was to reduce debt and rebuild from there.

"They have a lot of work to do, but they are obviously up to the task, I just hope they do it."

Newshub.

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