NZ Herald
  • Home
  • Latest news
  • Herald NOW
  • Video
  • New Zealand
  • Sport
  • World
  • Business
  • Entertainment
  • Podcasts
  • Quizzes
  • Opinion
  • Lifestyle
  • Travel
  • Viva
  • Weather

Subscriptions

  • Herald Premium
  • Viva Premium
  • The Listener
  • BusinessDesk

Sections

  • Latest news
  • New Zealand
    • All New Zealand
    • Crime
    • Politics
    • Education
    • Open Justice
    • Scam Update
  • Herald NOW
  • On The Up
  • World
    • All World
    • Australia
    • Asia
    • UK
    • United States
    • Middle East
    • Europe
    • Pacific
  • Business
    • All Business
    • MarketsSharesCurrencyCommoditiesStock TakesCrypto
    • Markets with Madison
    • Media Insider
    • Business analysis
    • Personal financeKiwiSaverInterest ratesTaxInvestment
    • EconomyInflationGDPOfficial cash rateEmployment
    • Small business
    • Business reportsMood of the BoardroomProject AucklandSustainable business and financeCapital markets reportAgribusiness reportInfrastructure reportDynamic business
    • Deloitte Top 200 Awards
    • CompaniesAged CareAgribusinessAirlinesBanking and financeConstructionEnergyFreight and logisticsHealthcareManufacturingMedia and MarketingRetailTelecommunicationsTourism
  • Opinion
    • All Opinion
    • Analysis
    • Editorials
    • Business analysis
    • Premium opinion
    • Letters to the editor
  • Politics
  • Sport
    • All Sport
    • OlympicsParalympics
    • RugbySuper RugbyNPCAll BlacksBlack FernsRugby sevensSchool rugby
    • CricketBlack CapsWhite Ferns
    • Racing
    • NetballSilver Ferns
    • LeagueWarriorsNRL
    • FootballWellington PhoenixAuckland FCAll WhitesFootball FernsEnglish Premier League
    • GolfNZ Open
    • MotorsportFormula 1
    • Boxing
    • UFC
    • BasketballNBABreakersTall BlacksTall Ferns
    • Tennis
    • Cycling
    • Athletics
    • SailingAmerica's CupSailGP
    • Rowing
  • Lifestyle
    • All Lifestyle
    • Viva - Food, fashion & beauty
    • Society Insider
    • Royals
    • Sex & relationships
    • Food & drinkRecipesRecipe collectionsRestaurant reviewsRestaurant bookings
    • Health & wellbeing
    • Fashion & beauty
    • Pets & animals
    • The Selection - Shop the trendsShop fashionShop beautyShop entertainmentShop giftsShop home & living
    • Milford's Investing Place
  • Entertainment
    • All Entertainment
    • TV
    • MoviesMovie reviews
    • MusicMusic reviews
    • BooksBook reviews
    • Culture
    • ReviewsBook reviewsMovie reviewsMusic reviewsRestaurant reviews
  • Travel
    • All Travel
    • News
    • New ZealandNorthlandAucklandWellingtonCanterburyOtago / QueenstownNelson-TasmanBest NZ beaches
    • International travelAustraliaPacific IslandsEuropeUKUSAAfricaAsia
    • Rail holidays
    • Cruise holidays
    • Ski holidays
    • Luxury travel
    • Adventure travel
  • Kāhu Māori news
  • Environment
    • All Environment
    • Our Green Future
  • Talanoa Pacific news
  • Property
    • All Property
    • Property Insider
    • Interest rates tracker
    • Residential property listings
    • Commercial property listings
  • Health
  • Technology
    • All Technology
    • AI
    • Social media
  • Rural
    • All Rural
    • Dairy farming
    • Sheep & beef farming
    • Horticulture
    • Animal health
    • Rural business
    • Rural life
    • Rural technology
    • Opinion
    • Audio & podcasts
  • Weather forecasts
    • All Weather forecasts
    • Kaitaia
    • Whangārei
    • Dargaville
    • Auckland
    • Thames
    • Tauranga
    • Hamilton
    • Whakatāne
    • Rotorua
    • Tokoroa
    • Te Kuiti
    • Taumaranui
    • Taupō
    • Gisborne
    • New Plymouth
    • Napier
    • Hastings
    • Dannevirke
    • Whanganui
    • Palmerston North
    • Levin
    • Paraparaumu
    • Masterton
    • Wellington
    • Motueka
    • Nelson
    • Blenheim
    • Westport
    • Reefton
    • Kaikōura
    • Greymouth
    • Hokitika
    • Christchurch
    • Ashburton
    • Timaru
    • Wānaka
    • Oamaru
    • Queenstown
    • Dunedin
    • Gore
    • Invercargill
  • Meet the journalists
  • Promotions & competitions
  • OneRoof property listings
  • Driven car news

Puzzles & Quizzes

  • Puzzles
    • All Puzzles
    • Sudoku
    • Code Cracker
    • Crosswords
    • Cryptic crossword
    • Wordsearch
  • Quizzes
    • All Quizzes
    • Morning quiz
    • Afternoon quiz
    • Sports quiz

Regions

  • Northland
    • All Northland
    • Far North
    • Kaitaia
    • Kerikeri
    • Kaikohe
    • Bay of Islands
    • Whangarei
    • Dargaville
    • Kaipara
    • Mangawhai
  • Auckland
  • Waikato
    • All Waikato
    • Hamilton
    • Coromandel & Hauraki
    • Matamata & Piako
    • Cambridge
    • Te Awamutu
    • Tokoroa & South Waikato
    • Taupō & Tūrangi
  • Bay of Plenty
    • All Bay of Plenty
    • Katikati
    • Tauranga
    • Mount Maunganui
    • Pāpāmoa
    • Te Puke
    • Whakatāne
  • Rotorua
  • Hawke's Bay
    • All Hawke's Bay
    • Napier
    • Hastings
    • Havelock North
    • Central Hawke's Bay
    • Wairoa
  • Taranaki
    • All Taranaki
    • Stratford
    • New Plymouth
    • Hāwera
  • Manawatū - Whanganui
    • All Manawatū - Whanganui
    • Whanganui
    • Palmerston North
    • Manawatū
    • Tararua
    • Horowhenua
  • Wellington
    • All Wellington
    • Kapiti
    • Wairarapa
    • Upper Hutt
    • Lower Hutt
  • Nelson & Tasman
    • All Nelson & Tasman
    • Motueka
    • Nelson
    • Tasman
  • Marlborough
  • West Coast
  • Canterbury
    • All Canterbury
    • Kaikōura
    • Christchurch
    • Ashburton
    • Timaru
  • Otago
    • All Otago
    • Oamaru
    • Dunedin
    • Balclutha
    • Alexandra
    • Queenstown
    • Wanaka
  • Southland
    • All Southland
    • Invercargill
    • Gore
    • Stewart Island
  • Gisborne

Media

  • Video
    • All Video
    • NZ news video
    • Herald NOW
    • Business news video
    • Politics news video
    • Sport video
    • World news video
    • Lifestyle video
    • Entertainment video
    • Travel video
    • Markets with Madison
    • Kea Kids news
  • Podcasts
    • All Podcasts
    • The Front Page
    • On the Tiles
    • Ask me Anything
    • The Little Things
  • Cartoons
  • Photo galleries
  • Today's Paper - E-editions
  • Photo sales
  • Classifieds

NZME Network

  • Advertise with NZME
  • OneRoof
  • Driven Car Guide
  • BusinessDesk
  • Newstalk ZB
  • Sunlive
  • ZM
  • The Hits
  • Coast
  • Radio Hauraki
  • The Alternative Commentary Collective
  • Gold
  • Flava
  • iHeart Radio
  • Hokonui
  • Radio Wanaka
  • iHeartCountry New Zealand
  • Restaurant Hub
  • NZME Events

SubscribeSign In
Advertisement
Advertise with NZME.
Home / Business

Fonterra to review governance structure

BusinessDesk
31 Jan, 2016 10:56 PM4 mins to read

Subscribe to listen

Access to Herald Premium articles require a Premium subscription. Subscribe now to listen.
Already a subscriber?  Sign in here

Listening to articles is free for open-access content—explore other articles or learn more about text-to-speech.
‌
Save

    Share this article

Fonterra chairman John Wilson, left, with Fonterra CEO Theo Spierings. Photo / Jason Oxenham.

Fonterra chairman John Wilson, left, with Fonterra CEO Theo Spierings. Photo / Jason Oxenham.

Fonterra Cooperative Group has kicked off a review of governance by posing the question of whether a board stacked with farmers has the right skills to drive a global business and whether milk suppliers in other countries should be able to hold shares.

New Zealand's biggest exporter released a 13-page conversation starter ahead of farmer meetings this month, with the aim of having any changes to its structure put before shareholders for a vote in May.

The review follows calls last year by shareholders and former directors Colin Armer and Greg Gent to shrink the board and increase its calibre following the departure of experienced independent Ralph Norris, former chief executive of Commonwealth Bank of Australia. Auckland-based Fonterra hasn't changed its governance and representation arrangements since being set up 15 years ago although it undertook a full review in 2013.

Like overseas counterparts Arla Foods and FrieslandCampina, Fonterra has a cooperative structure that adds layers of farmer bodies and processes to its board, reflecting checks and balances put in place to protect the interests of its farmer shareholders but also increasing governance costs and complexity.

By contrast executives at rival Nestle, the world's biggest food company by revenue, answer only to its 14-member board.

Advertisement
Advertise with NZME.
Advertisement
Advertise with NZME.

READ MORE:
• OIO approves Dairy Farms $47m buy of 5 Southland farms
• Fonterra cuts farmer milk payout
• Ratings agency downgrades NZ economy outlook

"The review work to date has confirmed that our governance and representation structures have served us well, but there is a real opportunity to further strengthen them," Fonterra said.

Stronger governance and representation were now needed to ensure Fonterra can meet goals including lifting the volume it collects to 30 billion litres of milk from five to six pools - both in New Zealand and in overseas markets - from 22 billion litres now, driving revenue to $35 billion over the next decade from $18.8 billion, it said. The company also aims to become the world's number one ingredients supplier, and to become the number one or number two consumer and food-service business in New Zealand, Australia, Sri Lanka, Malaysia, Chile, China, Brazil and Indonesia.

Advertisement
Advertise with NZME.

"An expanded milk pool gives us the flexibility to tailor our product mix and put farmers' milk into higher returning products," Fonterra said. "It also represents the necessary scale to maintain the relevance of our co-op in the international market."

Among "thought starters" in the document, Fonterra asks whether the role, focus and size of its board is appropriate for a modern cooperative, whether there is the right ratio of farmers to independent directors, and whether the company is attracting the best candidates, holding them to account and retiring them at the right intervals. Of the 14 skill sets it has identified for its board, only one relates to on-farm experience and a second relates to knowledge of what drives the farmgate milk price and earnings.

READ MORE:
• Fonterra sees more dairy farmer pain before revival
• Dairy futures point to weak demand
• Fonterra exports hit monthly record

Other desirable traits listed are experience running a $1 billion-plus business, global experience, audit, financial and risk management skills, knowledge of manufacturing and the global commodities trade, experience at a senior level in consumer goods, a track record of commercial/value creation, experience on boards of other companies of similar size and complexity, and a background in the application of science to large global companies.

Discover more

Business

Fonterra sees more dairy farmer pain before revival

24 Jan 07:30 AM
Agribusiness

Economy warning: NZ put on notice

26 Jan 07:55 PM
Business

Fonterra cuts farmer milk payout

27 Jan 10:15 PM
Agribusiness

Liquid gold: honey exports up 41pc

01 Feb 12:04 AM

It poses similar questions for the Shareholders' Council - does it have the right focus; does its representation model "reflect the global nature of our business"; is the councilor selection process right. Fonterra also asks whether more can be done to develop the next generation of leaders within the company.

Fonterra said its goal of lifting milk supply will require it to double the pool of milk sourced outside New Zealand to about 10 billion litres - one third of its total. It is aiming to source milk overall from "five or six geographies by 2025".

"International farmers who supply Fonterra often speak of their envy at the long-term success and security we have achieved through our investment in the Co-op," Fonterra said. "Through governance and representation, how do we help farmers in key milk pools feel part of our Co-op - making it less likely for them to switch their supply?"

International competitors in those markets have access to year-round milk supply and it "makes good business sense to integrate our global milk pools with local production and domestic consumer or food-service markets". It says having 100 per cent cooperative ownership is non-negotiable.

Fonterra Shareholders' Fund units, which are entitled to the dividends from the cooperative's shares, rose 0.2 per cent to $5.93 on the NZX today and have fallen 5 per cent over the past two years.

Save

    Share this article

Latest from Business

Business|companies

Entrepreneur Bowen Pan on why he returned to NZ

Premium
Business|companies

Silicon Valley to NZ: Kiwi Facebook Marketplace inventor is back home to give back

05 Jul 12:00 AM
Premium
Opinion

Bruce Cotterill: Is our bloated bureaucracy hindering economic growth?

04 Jul 11:00 PM

Audi offers a sporty spin on city driving with the A3 Sportback and S3 Sportback

sponsored
Advertisement
Advertise with NZME.

Latest from Business

Entrepreneur Bowen Pan on why he returned to NZ

Entrepreneur Bowen Pan on why he returned to NZ

The Kiwi founder of Facebook Marketplace and new NZME director on returning home and new projects. Video / Cameron Pitney

Premium
Silicon Valley to NZ: Kiwi Facebook Marketplace inventor is back home to give back

Silicon Valley to NZ: Kiwi Facebook Marketplace inventor is back home to give back

05 Jul 12:00 AM
Premium
Bruce Cotterill: Is our bloated bureaucracy hindering economic growth?

Bruce Cotterill: Is our bloated bureaucracy hindering economic growth?

04 Jul 11:00 PM
Premium
Fran O’Sullivan: ESG is being redefined as Europe ramps up defence investment

Fran O’Sullivan: ESG is being redefined as Europe ramps up defence investment

04 Jul 09:00 PM
Gold demand soars amid global turmoil
sponsored

Gold demand soars amid global turmoil

NZ Herald
  • About NZ Herald
  • Meet the journalists
  • Newsletters
  • Classifieds
  • Help & support
  • Contact us
  • House rules
  • Privacy Policy
  • Terms of use
  • Competition terms & conditions
  • Our use of AI
Subscriber Services
  • NZ Herald e-editions
  • Daily puzzles & quizzes
  • Manage your digital subscription
  • Manage your print subscription
  • Subscribe to the NZ Herald newspaper
  • Subscribe to Herald Premium
  • Gift a subscription
  • Subscriber FAQs
  • Subscription terms & conditions
  • Promotions and subscriber benefits
NZME Network
  • The New Zealand Herald
  • The Northland Age
  • The Northern Advocate
  • Waikato Herald
  • Bay of Plenty Times
  • Rotorua Daily Post
  • Hawke's Bay Today
  • Whanganui Chronicle
  • Viva
  • NZ Listener
  • Newstalk ZB
  • BusinessDesk
  • OneRoof
  • Driven Car Guide
  • iHeart Radio
  • Restaurant Hub
NZME
  • About NZME
  • NZME careers
  • Advertise with NZME
  • Digital self-service advertising
  • Book your classified ad
  • Photo sales
  • NZME Events
  • © Copyright 2025 NZME Publishing Limited
TOP