Fonterra chairman John Wilson's verbal sharp-shooting skills were put to good effect at the Trans Pacific Partnership (TPP) ministerial negotiations in Maui.

Wilson made a strong case to the United States - whose dairy sector has rapidly emerged as a major international exporter - to live up to its free trade billing and force the pace on lifting its own domestic protectionism so it could add moral force to the push on Canada (and also Japan) to give wider access to their dairy markets.

He was just two days in Maui. But his presence is said to have strengthened Trade Minister Tim Groser's negotiating arm by underscoring to other nations just why it is unfair to expect New Zealand to accept a deal which does not result in significantly more upside for its farmers.

The TPP negotiations are proceeding at a bilateral level in areas such as cars, dairy and IP which were not really resolved in Maui. Another ministerial meeting is likely later in the month.


It is important that TPP is finalised and that the major markets of the Asia-Pacific are further liberalised.

Wilson is forceful in his advocacy on dairy farmers' behalf.

But he is expected to face stiff competition to be re-elected as a director at the forthcoming Fonterra elections in November.

He has played a steadying role during some major crises that have buffeted the company in recent times. But with global dairy prices significantly in the doldrums some of his farmer shareholders are out for blood.

Wilson has been out lobbying around the country and also doing the husbandry work that is necessary to reassure shareholders that the company is on the right track and will provide personal support for them in tough times.

Much will ride on how this week's string of announcements is received; just how the company communicates the next round of consultations at Fonterra which are due to be announced today is vital.

The company has to ensure that in its effort to drastically slim down head office roles and also managerial and operational roles within local and overseas subsidiaries, there is sufficient budget retained to invest in the right people with the right core competencies to grow the business in a very challenging international environment.

Fonterra's outside consultant - Recovery and Transformation Services (RTS) - is financially incentivised to cut substantial costs from the dairy co-operative business.


Unlike some other areas where management consultant McKinsey and Co provides strategic advice to top corporates, its offshoot RTS takes a private equity approach. The more cost that can be carved out (headcount is just part of the equation) and efficiencies introduced, the bigger the reward for RTS.

This was a factor which raised some eyebrows when mentioned at Minter Ellison Rudd Watts' 2015 Corporate Governance Symposium in Auckland on Monday.

Wilson was among a number of leading independent directors and chairs at Minter Ellison's symposium for directors and senior executives. But he was not the player who mentioned RTS's incentives.

The symposium deliberately steered clear of what was happening within the various companies that the high-powered directors chaired.

Other speakers included independent directors Chris Moller (chairman of Meridian Energy and SkyCity Entertainment Group), Joan Withers (chairwoman of TVNZ and Mighty River Power), John Judge (chairman of ANZ New Zealand), NZ Super Fund chief Adrian Orr, John Phipps from Forte Equity Fund and Rob Everett, CEO of the Financial Markets Authority.

A number of themes emerged during the two-hour session, which was held under the Chatham House rule.

A particular one which has resonance for companies such as Fonterra gets down to today's fast-moving environment where the broad consensus emerged that the pressure on directors had rarely been tougher.

It was said that while the regulatory and social pressure on major organisations mounts, the 24-hour news cycle is shrinking to 24 minutes and accountability is increasing. To compound these issues, many New Zealand companies face static growth prospects.

In this environment it was more important than ever that companies stress-tested their strategy, their people and their prime assumptions. And that they should develop what one player called "muscle memory" - learning from what goes wrong by simulating crises.

This reality ought to guide Fonterra's communications efforts this week.

Some of the rhetoric on farming message boards has been unduly tough on staffers who have been unfairly blamed in some quarters for taking money out of farmers' pockets.

The company earned itself the sobriquet "Fortress Fonterra" - but after the false botulism scare an independent directors inquiry came up with recommendations to make the company more accessible.

The trouble is that it has since been buffeted by dropping demand in key markets such as China which combined with international oversupply has forced prices down.

A sense has emerged that key executives may have become too isolated from lower management layers as the transformation process proceeds.

On Friday the board meets in Auckland to determine by how much the milk payout will be reduced. The board will give guidance on future earnings and dividends and also milk volumes.

There are also suggestions that Sir Ralph Norris is not the only independent director planning to stand down from the Fonterra board. At least one of the three other commercial directors is likely to stand down relatively soon. This means the company will be seeking some tough-minded replacements.

Those appointments will be key.

Yesterday it was reported that New Zealand commodity prices fell at their fastest pace on record in July, notching up a fourth straight month of declines to the lowest level in almost six years, led by dairy.

The ANZ Commodity Price Index for July fell 11.2 per cent to the lowest level since October 2009, and is 27 per cent below levels a year earlier. Thirteen of the 17 main commodities declined.

The drop was led by a slump in dairy prices, which are down 23 per cent from June to the lowest level in more than 11 years.

These are rough waters indeed.

Overnight the GlobalDairyTrade auction was expected to post another price decrease for dairy products.

Wilson will be the key figure fronting this week's developments.

It is important for confidence across the board that he strikes the right note.