At the formation of Fonterra in 2001 it was thought New Zealand could essentially monopolize the world price of milk. From here, OMG, and what folly that appears now. Now, it is New Zealand’s largest economic liability, apart from real estate. Why hasn’t Fonterra worked?
The NZ Herald generated some thoughts last year from Tony Baldwin, leader of the government’s group that help change the whole industry.
You don’t have to agree with everything he said. I don’t agree that Fonterra should revert to bulk commodities at all, for example. But he made some good points.
Waikato Professor of Agribusiness Jacqueline Rowarth discussed the subject recently again in the Herald.
She understands the folly of Fonterra continuing in a race to the bottom of production, where its brands do not promote the values of our comparative advantage to other dairy producer nations, such as higher animal welfare, higher environmental regulation, extensive pastoral production, massive national branding strength, and more efficient production. That is to say, it does not advance the interests of New Zealand. It is not even close to generating strong competitive advantage.
It’s time the collective opposition stated that it will hold Fonterra to account as a core economic priority. Fonterra holds more power over our economy than Telecom did before it was forcibly split up by Labour’s 1999 government. It is a commercial entity formed by legislation and should therefore be regularly held to account by Parliament, and isn’t. No regulator currently touches it.
In the last two months, prior to its financial result a few days ago, its leadership faced up the the media a total of zero times.
Our regional economies and our regional environments are so vulnerable to Fonterra that it must be regulated. Even our current Prime Minister can see straight through their corporate lies to their suppliers.
Maybe it’s time for a Minister to sit on its board. Maybe a national water price regulator would help. Whatever. Apart from banks, Fonterra is our only economic Too Big To Fail. The Opposition must plan to pay as much policy and executive attention to Fonterra as it does to banking and real estate. Fonterra is New Zealand’s Nokia.
We are all too vulnerable to Fonterra for government to stay neutral to it.