Fonterra must answer two serious questions today.
They propose to sell New Zealand's flagship brands to the French company Lactalis, including brands like Anchor and Mainland, for almost $4 billion.
Farmers and the public need answers:
- Is Fonterra's "long-term agreement" for three, four, or ten years? Whatever the number, the clock will stop and New Zealand's milk will become just another in a long line of milk jugs. What stops Lactalis from diluting "New Zealand" products with vegetable fat and lower-quality milk?
- Is it true that CEO Miles Hurrell and Fonterra executives stand to earn huge bonuses from this deal, and if so how much? Is it also true that they plan to leave the company after this deal is done? If so, what is their long-term interest in Fonterra's success?
We need to get real. Quality always sells. The Anchor brand has growth ahead of it; why else would the largest dairy company in the world offer almost $4 billion to own Anchor?
Dairy companies that own their consumer brands have direct relationships with the customer. Anchor is a flagship brand, with a legacy built by generations since 1886 and more than 130 years of marketing New Zealand milk to the world, developing the products, building customer and consumer trust. For $4 billion, we are giving it away.
No successful milk futures market exists globally - so why does Fonterra think it will succeed where others have failed? Other dairy giants, like the company they seek to sell to, thrive because of their consumer brands.
Every dollar earned must reflect New Zealand's value add: turning milk into quality products creates jobs, income, and a future in New Zealand.
Fonterra say that affording to grow these brands is beyond them. A Fonterra executive told us it would cost "billions," but this is rubbish. Their new UHT plant in Edendale is in the tens of millions. They already have partnerships in New Zealand to process high-end milk in Hawke's Bay and package milk powder in Christchurch. There are investors and companies lining up to help Fonterra grow in New Zealand.
No more spoilt milk. We must grow New Zealand's fortunes, and farmers need to think very carefully about this deal.
