Craig's cockies meet new Fonterra man

By LIAM DANN primary industries editor

If Fonterra's new Canadian chief executive Andrew Ferrier had any illusions about the glamour of leading New Zealand's largest company his first meeting with dairy farmers yesterday must have brought him down to earth with a thump.

In a cold Hawera gymnasium - in the heart of Craig Norgate country - farmers at Fonterra's annual general meeting gave Ferrier a polite welcome.

But with the introductions out of the way they largely ignored him, preferring to devote their energies to a heated debate on complex supply issues that no one expected him to understand.

After the meeting Ferrier said he had enjoyed his day.

"This was the perfect environment for me to meet with dairy farmers," he said.

Ferrier has had just 10 days to get to grips with an industry that his predecessor spent his whole life learning. Consequently he spent a lot of the meeting quietly smiling and doing his best to look interested in the sometimes repetitive debates.

If the capacity crowd - many of whom consider Taranaki-born Norgate to be a local hero - had planned to give Ferrier a frosty welcome they were headed off by chairman Henry van der Heyden.

Before introducing Ferrier, he warmed them up with the news that next year's estimated payout had been increased from $3.80 to $3.95.

The increase wasn't timed especially for the meeting, said van der Heyden.

"Would I do that?" he said.

A move by European producers last week to reduce the supply of casein and cheese had boosted prices and allowed the payout revision, he said. The Fonterra board had met that morning to make the decision.

Before the parochial crowd van der Heyden was careful to credit Norgate for his good work.

But the word "merger" now belonged in the past, he added. "As my kids would say: we're over it."

Ferrier didn't need any help winning over his audience. He handled his introduction to the masses with the polished confidence of an experienced politician.

Heading off the critics, he asked: "What's a sugar man who recently headed a metal bashing firm now doing in Hawera talking to the world's most efficient dairy farmers."

Answering his own question, he touched on all the right buzz words. He had experience in commodity ingredients, added value to products, customer partnerships and trade barriers, he said. That was the sugar business. His most recent role as chief executive of listed company GSW had been all about improving performance, profitability and shareholder value, he said.

Clearly of the opinion that flattery would get him somewhere he pointed out that New Zealand's achievement in dominating the world dairy industry was spectacular.

"To my mind, Fonterra is the model of a modern co-operative. It is indeed world class."

Ferrier could be forgiven for not understanding the details of the day's big debate - about Fonterra's peak notes system. Peak notes are a kind of capital note distributed to dairy farmers on the basis of their seasonal supply curve. They are designed to reflect the relative production costs Fonterra faces to process its milk volume on the peak days of the season compared to the costs at quieter times. Believing the system too complicated the company had proposed restructuring. In the end farmers voted to maintain the status quo in all its intricate glory.

At lunch over trestle tables, filled with lamingtons and sausage rolls, Ferrier met his new shareholders with more smiles and handshakes.

Those who spoke to him said he was "very nice" but seemed none the wiser about what he will add to the company.

"We could cry about Craig Norgate for months but we've got to get on with it," said one. But Ferrier's state of blissful ignorance will need to be short lived. Farmers will be expecting to hear a lot more from him this time next year - particularly if the $3.95 payout fails to materialise.

The meeting, which was broadcast live to six venues around the country, closed with a resolution of thanks for the good work Norgate had done for Fonterra. It was, as van der Heyden noted, a fitting way to end. But it also served as an unnerving warning to Ferrier - farmers have formally recorded that they liked the last guy ... and look what they did to him.