Wednesday, July 6, 2022

Wilson takes Fonterra baton

Sir Henry van der Heyden tied up Trading Among Farmers (TAF) loose ends and handed over chairmanship of Fonterra to John Wilson at the annual meeting in Hamilton.

The second half of van der Heyden’s 10 years as chairman was dominated by capital restructuring of the co-operative, which he finally delivered before standing down.

“We have finally taken care of the problem of money washing in and out of the co-operative (redemption risk),” he said.

“As a result 100% farmer control and ownership has become non-negotiable. We have actually strengthened the co-operative.”

The TAF checks and balances remit, which fell short of the constitutional 75% approval at June’s special meeting, was passed with just less than 90% support.

That was a return to the approval rating for TAF in July 2010, which was the shareholders’ acid test after they rejected a recapitalisation plan in 2007-08.

Perhaps it was that rejection Wilson had in mind when he praised his predecessor’s ability “to run into a brick wall, pick himself up and run again”.

Perhaps it was the memories of a decade he described as one huge year after another that prompted van der Heyden to find a chairman’s “baton” suitably inscribed to hand on to Wilson.

Not a light conductor’s stick, but a genuine one-metre totara batten, which Wilson was cautioned against using on anyone.

Earlier in the annual meeting one of the most experienced and capable chief executives and chairmen NZ has ever produced, Sir Ralph Norris, observed the level of politics in the dairy surprised him.

Fortunately it did not prevent shareholders ratifying his appointment (85% of those who voted) as an independent director, nor him accepting the role.

Retiring independent Ralph Waters said Fonterra was the most complex and sophisticated business he had been involved with, and his record is almost as long and star-studded as that of Norris.

The remit proposed by shareholders Lachlan McKenzie and Ann Jones to prevent, among other things, independent directors voting on the board chairmanship, gained about half of the support (36.5%) it needed for a constitutional change.

McKenzie and Jones said it was big agricultural co-operative best-practice around the world that independents not have a say, while Fonterra said the opposite.

Perhaps the newest farmer-director can throw some light on that topic?

Blue Read, of Taranaki, is chairman of the NZ Co-operative’s Association, as well as being a former Fonterra Shareholders’ Council chairman.

He is the third council chairman to graduate to the board. The previous two are Wilson and John Monaghan, both of whom are still serving.

Read and incumbent directors Wilson and Nicola Shadbolt were elected from a field of 11 candidates.

Wilson begins his chairmanship with a fresh mandate, which he said should serve to unify the co-operative after the restructuring debates.

“The board needs to be highly effective to ensure our world-class CEO and his team deliver.

“We are in a good space and it would be a travesty if it were to be wasted,” he said.

Van der Heyden listed some growth parameters during his 10 years in the chair:

– Asset base increase 28% to $15 billion

– Processing volume up 34% to 1.5 billion kilograms of milk solids

– 350% increase in the average dairy farm value

– Average milk payout since 2001 of $5.44/kg MS.

“We have done what we set out to do – grow farmers’ wealth in the value of your land, shares and earnings,” he said.

Wilson said van der Heyden had served 20 years in total on the board of NZ Co-operative Dairy Company and Fonterra Co-operative Group, with some remarkable achievements that might  never be repeated.

Sir Henry’s growth spurt

– Asset base increase 28% to $15 billion,

– Processing volume up 34% to 1.5 billion kilograms of milksolids

– 350% increase in the average dairy farm value

– Average milk payout since 2001 of $5.44/kg MS.

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