Commercial remedy for dairy woes

By PHILIPPA STEVENSON

Fonterra chief executive Craig Norgate expects the legacy of dairy industry political rivalry to bounce around the company's board for some time to come.

But echoes of the past would grow fainter "because they're being swamped by the strictly commercial approach we are taking", he told an Auckland gathering yesterday.

Mr Norgate and Fonterra's controversy-driven high profile were a big attraction at the American Chamber of Commerce in New Zealand event.

More than 300 business people - a bigger-than-usual turnout - packed the $70 a head lunch to hear the 36-year-old head of New Zealand's largest company.

The board has been in the spotlight since the shock resignation of independent director Mike Smith, who left citing problems over governance.

Mr Norgate said the company, formed four months ago from a merger of the Dairy Board, New Zealand Dairy Group and Kiwi Dairies, would not confront criticism.

"We'll take it on the chin. When we do have a problem we'll expect it to be on the front page. We'll address it through performance," he said.

He said he was confident the board could deliver.



The board had no silver bullet for how it should work and was dealing with a very political history which it was endeavouring to leave behind.

"There's a healthy tension around the board, and I wouldn't have it any other way," he said.

"There are issues around the mix of skills as opposed to the numbers [of directors]. They are addressing it."

Mr Norgate said he was pleased with the company's performance.

"We have not suffered from the customer-retention problems, operational problems, or defections of key people typical of many mergers."

A focus for the coming year would be updating strategy, particularly related to acquisitions and joint ventures.

Among priorities would be integrating transtasman assets, and developments in North and South America.

Mr Norgate, president of the newly formed New Zealand-US Business Council, said he and Fonterra would be leading advocates of a closer economic partnership with the United State.

The benefits for New Zealand would be so great that achieving partnership needed to be a national obsession.

There would also be benefits for the US.

"We represent low-hanging fruit as they seek to achieve wider trade liberalisation goals in the interests of prosperity and security.

"With New Zealand - and Australia - it has the opportunity to complete a model deal which would increase the momentum for further economic liberalisation in the Asia Pacific region."

Mr Norgate said he and representatives of other leading New Zealand companies, including former Lion Nathan chief executive Doug Myers, would take the first step "to hustle" the deal in a delegation accompanying Prime Minister Helen Clark on a US visit in March.

Mr Norgate and Fonterra chairman John Roadley won respect for their willingness to answer shareholders' questions at a three-hour meeting in Pukekohe this week.

One of 35 meetings nationwide, it was attended by about 250 farmers, many of them fired up by Mr Smith's resignation and the 'Powdergate' exporting scandal.

One shareholder said that Mr Roadley had impressed with his sincerity and willingness to answer all questions, and Mr Norgate with his industry knowledge.

Mr Roadley had acknowledged the board's inexperience and had noted that some shareholders were keen for more experienced directors, even at the expense of farmer representation.