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Last Meeting:Dr. Peter Fraser, Economist
Our own member Peter, gave a spellbinding, if depressing account titled: "Apocalypse Cow. Why Fonterra has failed". He first justified his use of the word failed: it is now 20 years since there was first talk of forming Fonterra by amalgamating the main dairy companies of NZ. Since its formation its share price has actually gone down from originally $5.50 to the current $3.50 while the NZX has risen 400% in the same period. Worse, it has announced a loss of over $600-million in the last twelve months, and has a massive debt of $6.5 billion while it has a capitalisation (i.e. current worth) of $6.28 billion. Even worse, it has recently been selling off its best bits, like Tip Top.
By comparison the Irish dairy company KerryGold was founded in 1961, has diversified, and $50 worth of its shares in 1970 are now worth $500.
Essentially, Peter argued, Fonterra has failed because of its basic structure as an unregulated co-operative. Its farmer-owners are primarily interested in receiving maximum prices for their milk, and so Fonterra has always calculated an artificially high price for the milk it receives. On one level this means the firm has too little cash to diversify, which has been compounded by some disastrous decisions when it did try to diversify. On another level this has led farmers to expand production by such means as developing farms on unsuitable land and using expensive fodder supplements such as imported palm kernel. As a result most farms now need an artificially high milk price to survive. Most farms now depend on capital appreciation to be "profitable", and there are unfortunate environmental results of too intensive farming.
If this all looks like a downward spiral, it is. Fonterra, as a co-operative, cannot make a rights issue to acquire capital, is heavily in debt, committed to commodity production, and cannot afford to diversify. The excessive salaries and bonuses of the managers are not a good look. It really needs a new direction but its Board is still composed of old guard members who are responsible for the situation.
The address was convincing but chilling and if you'd like to know more, click HERE.
Faith in the cooperative has to be sustained and nurtured, because what happens in the present and future will always be more important than the successes of the past."
Please study and plan ahead, especially if you are on duty to write a Bulletin Contribution. A reminder that it's also your responsibility to find a replacement if you are unable to fulfill your duty.
The Environment Protection Authority runs a programme called Safer Homes, which is essentially about keeping people safe at home around hazardous substances, e.g. household cleaners and gardening sprays. Lizzie is a Senior Communications Advisor and Safer Homes programme manager and will share insights on keeping safe safe at home around chemicals - particularly with Spring right around the corner.
There are lots of features available for the Committee (only) to make use of under ClubRunner. If your wanting to start a project or event, first open up ClubRunner and go to "Admin", then "Events", "Events Planner" and finally "Create a New Event", but for a full description on how to use it, click HERE.
REMEMBER, because it is confidential information, you must Log-in first. This is done at the top right hand side of the website where it says, "Member Login". If you don't have your personal Log-in, follow these instructions HERE.
