KEY POINTS:
Fonterra chief Andrew Ferrier says unprecedented market volatility calls for constant re-evaluation.
How has the credit crunch changed your world?
The sheer unpredictability of the current environment calls for a much more hands-on approach to management.
The level of uncertainty and volatility globally requires a much
firmer grip on the wheel day-to-day, and also planning for the unexpected at every turn.
This ensures that we stay on course with our long-term plans and, at the same time, have all the right protection mechanisms in place for the business.
This is an environment which has us making back-up plans for back-up plans so we have multiple options if the unexpected happens.
The scale and global nature of the financial issues affecting all companies means we have much higher levels of contingency planning and plans which include a much wider range of scenarios than would normally be required.
The aim is always to avoid the worst of the impact and position ourselves for the recovery when it happens.
At a personal level, all of my leadership team will be staying a lot closer to the business over the break than we would be doing in more stable times. It will be a case of trying to relax while staying braced for action.
How serious is the current downturn in the historical context?
History will be the judge of how serious the current downturn is.
What we are seeing is an unprecedented combination of events, at a time when economies around the world are more connected and inter-reliant than ever before.
There is no real historical compass to guide us with regard to the short-and medium-term impacts. In fact, history keeps being written. If you look at the dairy industry, for example, last season we saw milk powder prices climb to levels never seen before - around US$5000 per tonne - driven by events which have not been seen before.
And now we have a situation where they are falling at a pace which has also not been seen before. The entire commodities market is extremely volatile with similar trends for barley, maize, soybean meal and wheat which have also fallen by between 40 and 55 per cent over the same period.
Words like "volatility" are being used so often people are becoming immune to them, but we cannot escape the fact that these really are very unpredictable times, hence the need for much closer management and a much higher level of contingency planning. There's just no room for complacency.
What helps you put it in perspective and stay positive?
During what is a difficult time, it's important that we don't let current short-term challenges obscure the longer term opportunities.
The long-term prospects for dairy are strong.
Fonterra supplies products which meet vital nutritional demand, they are versatile foods and increasingly will be used to deliver health benefits for consumers.
If you look at the fundamentals underpinning the market, you can see they are sound, with dairy demand globally expected to steadily grow over the medium term.
The global population is growing, food production has to grow to keep pace with demand and dairy is a dietary staple in the vast majority of countries around the world.
The UN estimates that global food production will have to double by 2050 to meet the estimated nine billion people there will be in the world, compared with around six billion today and 7.5 billion by 2020.
In a recession, people redo their budgets and they cut back, but not on foods which deliver the best nutrition for the best value. Dairy fits that bill.