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The Paradox of Dairy

Over three days, we have seen the paradox of dairy thus:

a) The critique of Fonterra by long time critic Tony Baldwin in last Friday's NZH wherein he pointed out the total inability of farmer driven co-operatives to structure capital requirements, and respond in the same way as normal commercially driven organisations. His six points of concern made extremely interesting reading, and reflects my own experience and frustrations with the co-operative model when dealing with the realities of the marketplace. 

b) The rather pathetic response today by Fonterra Chair - John Wilson. John managed to avoid answeering almost every single one of the points made by Tony Baldwin, and simply regurgitated all the old homilies about the "success" of the co-operative in meeting the requirements of its producer members.  He failed to answer the serious concerns highlighted by Baldwin regarding its failure to compete in a timely manner with the up-stream processing of its international compeditors. He was far from convincing!

c) This followed this story in the Waikato Times on 27 August  regarding the manner in which our WRC is 'going-soft' on dairy for the duration of of the 'downturn.' What this means is a complete 'back-off' on environmental surveillance, and instructing staff to 'work-out' problems with effluent disposal amongst other issues 'on-farm.' What a cop-out - there was not even an attempt to compromise or offer temporary relief - simply a total 'cave-in' that augers very badly for future health of our rivers in particular. Farmers will surely 'push this envelope' just as far as they can, and there was no indication as to when full controls and surveillance will resume - is it to be determined only by a return to $8 a kilo?; or is there some other benchmark - hardly!

When you put all this together you begin to understand the lack of business skills both in the WRC and at Fonterra that have allow this situation to develop while those in control have been 'asleep at the wheel.' One can no confidence that either know what they are doing,  and it points to the over reliance we have placed on this industry while providing it with economic and political advantages that we now appear unable to influence.

I have consistently criticised this industry in the past, and will continue to do so while we continue to allow it to behave in this manner. And we as rate-payers are directly affected through the favours extended by WRC.




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Reader Comments (1)

Bill - Interesting re WRC going soft on farmers but the outing of the TCDC Regulations boss has similar tones of loosening of the rules. There would be a few more nervous souls in the Castle at present I'm guessing.

August 31, 2015 | Unregistered CommenterSideliner

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