Fonterra concedes milk collection simply not good enough

11.00am - by KENT ATKINSON

The chairman and the chief executive of the nation's biggest company, Fonterra Dairy Co-operative Ltd, risked a bad case of "grovel rash" today with wordy apologies to their farmer shareholders over bungled milk collections.

"I've got to tell you plainly that I step down from this job this afternoon with a degree of disappointment and frustration that things have not gone as well as you wanted and I had hoped in these early days," retiring chairman John Roadley told the company's 13,000 farmers.

"Many of the things that we have slipped up on recently appear to be so simple as to be inexcusable," he said in notes prepared for the annual meeting held at Hamilton and relayed to six other venues around the nation.

Last month, Tony O'Boyle, chairman of the farmers' watchdog, Fonterra Shareholders' Council, warned farmers were concerned over inadequate documentation of the milk collected and feedback on the milk's quality.

"The level of service to a significant portion of the shareholder base is unacceptable," Mr O'Boyle said.

The collection system is part of a new $3 million milk management and shareholder services system called Aspire, built by the Jade software company.

Farmers were unhappy about the daily docket they received when their milk was collected, containing production, grading and milk quality information, and some farmers complained that their milk was not even collected. They also complained about significant delays in milk grade notification, illegibility of tanker dockets or tanker dockets not being left at all.

Mr Roadley said today that he believed real progress was being made now to improve levels of service and that the Aspire technology would deliver efficiencies.

"I know full well simply putting the problems you have been suffering down to teething troubles -- cuts no ice when it is your farm and your milk being affected," he said.

"I want to say to you I very much regret and apologise that these problems happened."

Chief executive Craig Norgate was also blunt: "The most important thing that these issues have highlighted is the need for us to constantly remember who owns this company -- and I can assure you that that message has been delivered, and received, in no uncertain terms.

"Our performance in some areas simply hasn't been good enough," he said.

"Most of these problems stemmed from the necessary introduction of new systems.

"I am painfully aware it's not customers, and opportunities out there in the world at large that have been uppermost in your minds -- it's tankers that don't turn up at your farm when expected, daily dockets you can't read, and peak note calculations that are just simply too complex."

Mr Norgate, who is built to generous proportions, attempted to inject some humour by saying he was not hiding behind anything or anyone.

"Let's be honest here, for me, that's always going to be a challenge."

Mr Norgate said Fonterra had greatly improved its service in the company's call centres, with all but a handful of calls each day now being answered within 20 seconds, and it was working toward having the person who picked up the phone being able to answer 80 per cent of the queries from farmers.

The ratio of field staff to suppliers was now down to almost 1:400, and the company had started dealing with the confusion, and general lack of understanding, around the Aspire system, by publishing an information booklet.

Difficulties around the daily docket were being tackled with improvements being rolled out this month, and more improvements scheduled for December.

"I think most of you would agree, perhaps grudgingly, that we are working solidly through what ... we will look back on as teething problems," he said.

- NZPA