KEY POINTS:
Perhaps the greatest threat facing Fonterra's 11,600 dairy farmers is posed, not by the rising cost of inputs or of land, nor by the exchange rate, the challenge of low-cost competition or the "food miles" fallacy.
The United States commission of inquiry seeking reasons why the September 11
attacks were not anticipated, chillingly cited "a failure of imagination" as a prime cause.
We are all to hope profoundly that Fonterra's farmer owners - shortly to make some crucial, fundamental and irrevocable decisions about their company's future - do not make the same mistake.
Fonterra was created out of the conviction that the New Zealand dairy industry, having gained pre-eminence in efficient milk production and built a global network through which to market its products - branded or otherwise - needed to become a significantly larger and more effective player on the world stage.
The road the industry travelled to reach that point in its history was a rocky one. The international market was constricted by trade barriers, distorted by subsidies and, geographically, a very long way away.
While the Dairy Board battled to keep the market doors open and the product flowing, the dairy co-ops wrestled with each other (and the board) to gain advantage for themselves; understandable but not exactly optimal in terms of overall industry performance.
A co-operative industry certainly, but not one that always co-operated.
Nonetheless, for the past 100 years or so the dairy industry has seen itself as staunchly co-operative, its farmers united in the conviction that ownership of that which lay between the farm gate and the customer was essential to their security.
There were, and are, two key reasons for that belief. First, because the co-operative structure ensured there would always be a factory to process what is a highly perishable raw material derived from animals - not as yet fitted with an on/off tap - and secondly, to capture, on-farm, the value added to milk beyond the farm gate.
For most farmers today, that reasoning still makes very good sense. But the world has changed since the inception of Fonterra. And it will continue to change. Fonterra, not without the odd and predictable stumble along the way, is well placed to take advantage of these changes, provided farmers can agree on some fundamental changes to the financial structure of the co-operative.
The longer-term global supply demand outlook looks enticing. Some of the competition is running into energy and climate change problems, and it is not impossible that the world may eventually realise agricultural subsidies are not merely bad economics, but a crime against a sizeable chunk of humanity.
Making the most of these new realities and emerging opportunities is going to need more capital. Heaps more.
This is why Fonterra has its capital structure under review. Sure, there are big problems to be faced. But they are not insurmountable. Farmers are right to be worried that external capital might threaten ultimate ownership and control. But they would be wrong to believe that must necessarily be the case.
Equally important is that every Fonterra farmer sees him or herself as not simply a producer of milk but as the owner of a business marketing foods made from milk, both produced on their own farms and purchased from farmers around the world.
The focus of dairy farming has always been on efficient milk production. That will remain. But the business Fonterra farmers own has the potential to create so much more value. As strategic and structural options for the industry's future are debated, it is to be earnestly hoped that Fonterra's farmers are alive to what may yet be achieved by the business they own.
Its potential is electrifying.
All New Zealand has a stake in the deliberations ahead. Unless this country achieves substantial and sustained economic growth, our grip on first world status will become increasingly tenuous. The social consequences don't bear contemplation. Selling each other lattes and intoning "have a nice day" won't do it. Releasing what is yet latent in Fonterra just might.
What's needed is courage, cool heads - and imagination.
* Neville Martin is a dairy industry commentator and worked as a communications executive for the Dairy Board.