Within days of taking up the reins Monaghan was active."We brought in a new purpose, new strategy, structure and culture."
He felt the business had somewhat lost its way culturally and set about uniting everyone under the banner of "You, me, us, together".
The new strategy has been at the core of the change in processes central to refreshing Fonterra's culture and behaviours.
We've delivered substantial wealth for not only our farmers but for New Zealand. We've grown from a $6.3 billion industry in 2001 to an industry that's forecast to produce more than $19 billion today.
Transparency has been a key theme during Monaghan's time as Fonterra's chairman. "Being a governor of a co-op brings demands and an accountability that you don't always see in other organisations.
"It's not just about turning up to an AGM once a year. Our shareholders expect contact as part of the cultural reset."
Monaghan and chief executive officer Miles Hurrell also communicate in plain language.
The chairman says they talk like farmers, even though they are running a global business. It's a way of staying connected to the shareholders and their culture.
Likewise he had a focus on rebuilding trust. "We burned off some of the trust with our performance. First with our farmers and shareholders, then second with the wider New Zealand public. The only way to correct that is how we turn it around with our new purpose and doing what we say we are going to do."
Monaghan has never lost sight of the fact Fonterra is a co-operative, not a conventional corporation. He says this is one of the company's greatest strengths and the aspect he is most proud of.
"In the late 1980s, dairy was seen as a sunset industry. Tourism and banking were going to be the future. But here we are," says Monaghan. "We've delivered substantial wealth for not only our farmers but for New Zealand. We've grown from a $6.3 billion industry in 2001 to an industry that's forecast to produce more than $19 billion today. It is our largest exporter, but it is still largely owned by mum and dad New Zealand dairy farmers. For every dollar of income, 50 cents goes back to the regional economies.
"We're really conscious of that."
Monaghan says Fonterra's business is food, which he regards as exciting. Customer needs and tastes constantly change. There's a lot of energy when it comes to new product development or reaching new and emerging markets.
"As a co-op one of our biggest advantages is our scale and global reach," says Monaghan. "At a time like this when there is a global crisis our ability to put a farmer's milk into the products and into the places where they are most valuable is important. We can do this at scale. We are also able to leverage long-standing logistical partnerships with the likes of [Danish shipping company] Maersk.
"Over the last couple of years we've had good farm gate milk prices. Our financial results are solid and the balance sheet is in a much healthier state. If you look at where we went with our portfolio review, it has helped us to dramatically reduce debt over the last two years."
The result of all this work is to build an organisation Monaghan says is now "match fit" and well-positioned to deal with the post-pandemic global economic turndown.
This means getting back to basics. He says for a while Fonterra was trying to be all things to all people. Take the sale of the Tip Top ice cream business. Monaghan says it was an easy decision as Fonterra is not a confectionery company.
He readily admits Fonterra would not have been in shape to weather the coming storm had Covid-19 happened two years ago.
"It wouldn't have been a good place for us. The fact that we made those changes and have been focused about making them, regardless of external criticism, with a focused board and management team conscious of turning up and doing things differently, doing more listening and getting on with the job."
Monaghan grew up in a farming family. Both his father and grandfather ran dairy companies. He says one of the biggest changes he has seen in his lifetime is the level of compliance needed on a farm.
"A lot of that change was needed. It's around animal welfare, health and safety, milk quality and environmental standards. They are good things for our industry, but they come at a financial cost.
"Most farmers get into farming because they have a passion for working with animals or the land. They don't have a passion for paperwork. That's one of the areas where our co-op can help so they spend less time doing that.
"Today roughly a quarter of our farms have environmental plans. Our target is to get that to 100 per cent by 2025. I'm proud of that achievement to date. There is limited land in New Zealand; there's an expectation for farmers to reduce their environmental footprint. So the only way we can grow dairy now is to grasp value through innovation."
