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Current as of 24/10/16 06:19PM NZST
Jamie Gray is a business reporter for the NZ Herald

Fonterra puts spotlight on board make-up

Fonterra Chairman John Wilson during his presentation to their annual meeting in Palmerston North. Photo / Mark Mitchell
Fonterra Chairman John Wilson during his presentation to their annual meeting in Palmerston North. Photo / Mark Mitchell

Fonterra's first draft of its recommendations on the size and makeup of its board will be made public tomorrow.

This comes after a series of farmer meetings and roadshows around the country to gauge opinion on board representation.

As it stands, Fonterra has 13 directors - nine farmer-elected and four appointed. Expectations are the board's size could be reduced slightly.

At last year's annual meeting, former board members Colin Armer and Greg Gent led a campaign to reduce the board to nine members. Their proposal gained 54 per cent support, short of the 75 per cent needed to change the constitution, but enough to show the depth of feeling.

Federated Farmers dairy chairman Andrew Hoggard, who is a Fonterra supplier, said he did not expect to see big changes from the review.

"From talking to farmers, the reduced board size thing seems to have dropped out of people's thinking. My bet would be that the board size will not change, but there may be something about the eligibility of candidates standing for office.

"I don't think that we will see anything completely flipped up on its head."

The representation issue comes as farmers struggle with milk prices well below the average cost of production: Fonterra's milk price forecast is just $3.90/kg of milksolids.

"[Board representation] is a big issue, but it's just another thing right now. It's not what everyone is focused on," Hoggard said.

At last year's annual meeting, Armer and Gent argued that a smaller board would make Fonterra more efficient and quicker at responding to changes in market conditions. In a discussion booklet issued early this year, Fonterra asked whether a board stacked with farmers had the right skills to drive a global business.

A committee set up to look at governance is headed by Fonterra chairman John Wilson and Ian Brown, a current member and former chairman of the Fonterra Shareholders Council. The review also covers the Fonterra Shareholders Council, which acts as a cornerstone shareholder and protector and guardian of the co-op's constitution.

- NZ Herald

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