Farmers warn Fonterra

By LIAM DANN primary industries editor

Dairy farmers yesterday served Fonterra a stern reminder of who was boss by dumping two directors.

Of three board positions up for grabs in the annual shareholder vote only one incumbent, Harry Bayliss, held his seat.

Stuart Nattrass, a former global head of foreign exchange risk for Westpac, and John Wilson, a former chairman of farmer watchdog group the Fonterra Shareholder's Council, were elected to the other two posts. Founding directors Richard Booth and Marise James will step down from June 1.

The vote was a clear message that the board needed to consult farmers better, said Dairy Farmers of New Zealand chairman Kevin Wooding.

"Two directors out is huge," he said. "Normally you get one but to have two like that, it's saying something really strong."

Farmer discontent was about more than just milk payouts and world prices, he said.

"It's the relationship farmers have. They've said it's got to improve. You're talking about 20 per cent of the board, so it will change ... We just hope it changes for the better."

Fonterra chairman Henry van der Hayden said he had no view on the message the vote sent.

"I respect the farmers' decision. I would tend to focus on going forward. We've got to create value for shareholders and we're doing that."

Van der Hayden welcomed the two new directors and said he looked forward to working with them. "As long as they come in with that approach, I think it's positive."

Fonterra Shareholders Council chairman Tony O'Boyle said he believed voters took a measured approach to the election rather than just voting for wholesale change.

Outgoing director Booth wished the new board the best of luck. "In the last couple of years we've managed to do something great for the industry. The farmers have had their say and we'll live by that."

Chartered accountant James also failed to get re-elected, her departure leaving Fonterra with an all-male board.

Nattrass, 41, is a new face to many in the dairy sector, having worked in the banking sector for 16 years.

His selection - despite no one knowing who he was seven weeks ago - was a message of sorts, he said.

"I stood on the basis that I had skills that I didn't believe were in the board or were available with the other candidates," he said.

Nattrass is experienced in foreign exchange risk management.

Until two years ago he was based in Sydney with Westpac, but he returned to Canterbury to follow his passion for agribusiness.

Raised on a farm in South Canterbury, his original reason for going into banking was to earn enough money to buy a farm, he said.

He now owns a 420ha pastoral property and shares in a 1200-head dairy farm.

At 38, Wilson already has a strong background in the dairy industry. He has held leadership positions as inaugural chairman of both the Fonterra and New Zealand Dairy Group Shareholders Councils. He is also a member of the Milk Pricing Working Group looking at Fonterra's capital structure.

Wilson lives near Te Awamutu with his wife and four children. With his brother he runs a dairying business, including a 270ha farm in Te Awamutu and a jointly owned 1180ha operation in South Canterbury.

South Taranaki farmer Bayliss, an original member of the Fonterra board, was returned with more votes than any other candidate.

Just 49 per cent of Fonterra's 12,600 farmer shareholders voted in the elections.

The general apathy painted a grim picture of relations between the two groups, Wooding said. He had expected the poor payout to stir interest in the election.

Fonterra farmers will be paid just $3.60/kg of milk fat this season - down from $5.33 the season before.

But van der Hayden said he was pleased with the turnout, which was about the same as last year.

The board

* Fonterra's board consists of 13 directors.

* Four are independent and nine are elected by farmer shareholders.

* Every year three elected directors must step down (they can choose to stand for re-election).

* Shareholders vote to determine the three new directors.

* Last year directors were paid a base fee of $55,417.