Fonterra head office in Auckland's Fanshawe St. Photo / Michael Craig
Fonterra head office in Auckland's Fanshawe St. Photo / Michael Craig
The announcement of Peter McBride as next Fonterra chairman is no surprise but it does set a record for the pace of director progression to the head of the top table at New Zealand's biggest company.
McBride, previously chairman of global kiwifruit marketer Zespri, arrived on the Fonterra board 17months ago, the highest polling candidate in that year's farmer-shareholder elections for the cooperative's farmer directors.
He has long been tipped as the most likely successor to John Monaghan and shareholders approached by the Herald said they were happy with the news, although there was a feeling another contender could have been Brent Goldsack, a former PwC partner who has been a farmer-director a year longer.
McBride was selected by the Fonterra board from within its pool of seven farmer-directors as required by the company's constitution. It also has independent directors.
Monaghan succeeded John Wilson, who died early last year. Both were long-time Fonterra directors.
McBride received 80 per cent support of votes cast in the 2018 director election. The next highest polling candidate at 62 per cent was Leonie Guiney, who was elected to the board for the second time.
Te Aroha-born McBride, 56, has a dairy farm in south Waikato and is chief executive of Trinity Lands, a dairying and kiwifruit company. He has two advisory roles with Zespri and said he plans to continue in all these roles. He lives on an avocado orchard at Te Puna in the Bay of Plenty.
He told the Herald the merit of an early announcement was a smoother handover because he would work with Monaghan in the lead up to November, and less disruption and more certainty for management.
Fonterra has an almost new top management table with a new business strategy as it works to recover from disastrous financial results in 2018 and 2019.
Given his short time on the Fonterra board and little opportunity to travel to the multinational's markets because of Covid-19, he said his biggest challenge would be getting his head around Fonterra's complexity.
The only real parallels between Zespri and Fonterra was they were both regulated, he said.
"Fonterra is a capital intensive, highly complex business and Zespri is capital-light, single product-focused producing a consumer-end product directly off the land.
"Zespri was designed to be capital-light with a very heavy focus on marketing and promotion whereas Fonterra has a much broader brief and it's much bigger in scale and with that, obviously governing at a different level in terms of delegated authorities so there's a bit of an adjustment (to make) there.
"But the same principles apply - it's Miles and his team's business to run."
Asked if he would have accepted the job if Fonterra had not shown signs of turning the corner from its $605 million loss last year, McBride said, "Yes, I don't mind a challenge".
"I've been in worse situations with kiwifruit - we didn't know if we had any future. In agriculture, you take a long-term view. It's about holding your nerve."
McBride was a director of Zespri during the industry's battle against the devastating bacterial disease Psa from 2010. He became chairman in 2013.
Better governance?
A survey of Fonterra farmer-shareholders taken as part of a review of the performance of the $50 million Fonterra shareholder watchdog council spotlighted farmer grievances about feeling disconnected from the company they own, and not having enough direct contact with directors.
Will McBride be addressing the problem?
"I come back to Zespri which is Bay of Plenty-centric with 80 per cent of the business out of the bay. It's easier for growers to feel connected. Fonterra is a national business. A lot of the shareholders come out of smaller companies (merger entities) so over time feel less connected (to Fonterra)."
McBride said it was important for farmers to be represented and for the board to hear their perspective.
"It is really time-hungry on directors to engage with farmers but we understand the need to do that and there are different ways to do that and with technology now, to connect."
Another challenge was how to bring the market closer to farmers, McBride said.
He's on the small board and management team reviewing Fonterra's capital structure.
He thinks the review is necessary - but not speed. Some shareholders have called for faster progress on the review.
"Everyone wants things to go faster but then you realise how complex these issues are. There are very complex legal, regulatory and stakeholder issues to (navigate) - it has to be done respectfully and thoroughly."
