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Current as of 28/03/17 02:59PM NZST

Fonterra farmers 'concerned', not angry

By Ben Chapman-Smith, Ben Chapman-Smith

Fonterra's thousands of farmer suppliers are wondering what the impact of this latest scare will be.
Fonterra's thousands of farmer suppliers are wondering what the impact of this latest scare will be.

The official voice of Fonterra's 10,500 farmers says the mood on farms around the country right now is more one of "concern" than anger.

As the dairy giant battles to clean up the mess of its contamination scare, farmers are wondering exactly how big an impact the issue will have on them.

Ian Brown, head of the Fonterra Shareholders' Council, said he had heard "a full range" of opinions from farmers since the news broke on Saturday morning.

But the strongest word he used to describe how farmers were feeling was "concerned".

"Some understand the situation and that there's a process to be worked through. I do have a lot of farmers in that camp and I do have some farmers that are concerned."

The Shareholders' Council is made up of 35 elected councillors who each represent a geographical ward around the country.

Brown, from South Waikato, said most farmers simply wanted to know how the contamination had occurred and what steps were being taken to deal with it.

Whether the scare would have an impact on their earnings had not been "a strong theme", he said.

"I really haven't had those concerns and I think it's just too early to tell. I'm not really getting that question from farmers. It's really a question around what's going on and how's it being handled."

Brown said he found out on Friday night that a number of Fonterra's customers used whey protein that might be contaminated with botulism-causing bacteria.

He did not think the scandal would dent farmers' confidence in Fonterra management.

"I wouldn't so much say it's knocked their confidence but this is a busy time of year on farms - their minds are full with calving etc - and it's just another question in their minds."

Views expressed privately to the NZ Herald this week suggest some farmers are furious about the issue.

One central North Island farmer said the scare was likely to put downward pressure on the farmgate milk price, which has the greatest bearing on farm incomes.

"In the medium term it will do some damage to the brand because we command a premium for quality," he said. "If we can't provide that, then why pay for it?

"I would hate to be at the next Fonterra shareholders meeting - they will give them a bollocking," he said. "The directors will be bracing themselves for it I think because they are so tough on farmers' milk quality."

Brown said he had been in daily contact with Fonterra chair John Wilson and that the Shareholders' Council has convened twice via conference call this week.

A key part of the council's role was getting updates from management and feeding these back to farmers, he said.

"The best way to alleviate their concerns is just to lift their understanding of the issue, of which the communications process is playing its part."

There would be "conversations" between the council and the Fonterra board once the immediate problems of ensuring product safety and recalls had been managed.

"There'll absolutely be conversations, as there normally would be. But that won't happen until we've got through the short-term."

The dairy company identified the bacteria on July 31, before making a public announcement on August 3, outside trading hours on the New Zealand stock exchange.

Brown said he was not personally concerned about the way Fonterra had handled the issue.

"I guess I'm a little bit closer to it than a lot of people and I think the response has been absolutely appropriate by management. I absolutely support what they're doing."

The scare follows January's dicyandiamide (DCD) incident, when traces of the nitrate inhibitor used on farmland were found in Fonterra milk.

Fonterra also had a joint venture with Sanlu, one of the companies caught up in the 2008 melamine scandal that killed at least six babies and made hundreds of thousands ill in China.

- NZ Herald

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