Suppliers criticise Fonterra over decisions on products

By PHILIPPA STEVENSON

Critics of Fonterra's business practices have emerged on a new front.

Several product suppliers to the dairy giant's rural service stores, RD1, say they have been ejected from the nationwide chain despite strong customer demand for their goods.

Their criticism follows last week's storm of complaints from farmers over milk collection foul-ups, and an inadequately staffed call centre.

The disgruntled businesspeople selling water reticulation equipment, fencing and gumboots say they are concerned at the "thinning of supply lines" to RD1's 51 stores from Northland to Southland.

RD1 is the successor to the Town and Country Agri Centres and Anchormart stores of the two dairy manufacturers, Kiwi Dairies and Dairy Group, that formed Fonterra last October.

Maurice Wooster, managing director of Upper Hutt's Robertson Engineering, said the company's Strainrite fencing had been a top seller in Town and Country and, despite restrictions, in Anchormart as well.

"It was a market-driven product and we had the sales to prove it but we lost the business," he said.

Other rural service companies were stocking the products. "Long-term it's not a lot of bother," Wooster said, "short term it's a bugger."

David Jobe, managing director of 30-year-old Matamata family firm Jobe Valves, said his trough valves were popular with farmers but RD1 was acting as "judge and executioner" when selecting stock.

"They have the right to sell what they want but I question that they are so bureaucratic and dictating to stores," Jobe said.

Jobe feared that innovation by small companies would be stifled if they weren't given a chance by such a big market player.

Paul Wallace, managing director of Otorohanga-based Bullseye Rubber Products, said RD1 had retained the company's rainwear but dropped its gumboots, leaving it holding a lot of stock.

"After 10 years of servicing Anchormart we're disappointed to be treated in this rough manner and not to be given an exit strategy to help us adjust," he said.

NRM business manager Rev Crawford was less concerned after RD1 stopped stocking the large feed company's Champ Max dog biscuits but retained other products.

NRM had an excellent relationship with RD1 which was entitled to make business decisions.

RD1 chief executive Brian Bilas said the company did offer its customers choice.

"Typically, we might have had four or five different vendors supplying exactly the same product to us. The process has been that all vendors have been invited to put proposals to us to retain the business." Some had succeeded and others had not.RD1 had limited shelf space and did not need to stock six different types of one product. "We can probably get away with two." Some suppliers may have previously supplied a regional market but could not meet nationwide demand, he said.