Cooperative Business NZ is speaking up for Fonterra and the co-operative business model, with CEO Craig Presland going in to bat for our largest co-op through the media and beyond.
Craig has been asked by several journalists and commentators what impact the co-operative business model has on Fonterra’s recent performance following its 2017/18 pay-out and operating losses announced yesterday (September 13).
Despite these results, Cooperative Business NZ remains firmly resolved that Fonterra, as a strong co-op, is the only model that serves to deliver a strong future for its shareholders and farming families in New Zealand, Craig said.
“Despite being able to raise capital via investors (non-suppliers of milk) since being publicly listed, Fonterra has maintained its strong co-op status by being 100% owned and controlled by its 10,000 milk-supplying shareholders.
“In addition, the New Zealand public needs to recognise that out of Fonterra’s $20.4 billion revenue generated in 2017/18, a good portion remains within the New Zealand economy and this is a real positive. Look at our four major banks right now with over $5 billion in annual profits and all now owned by Australian parent companies, along with all those publicly listed companies in NZ that are either 100% foreign-owned, otherwise substantially foreign-owned, with profits also heading off-shore.”
Craig points out that many families have owned the same dairy farms across several generations.
“By being owned by its Members, Fonterra has remained in control of its destiny while being able to endure through good times and bad going back to 1871 when the first dairy co-op was formed on the Otago peninsula,” he said.
At present co-ops, mutuals and societies generate over $45 billion pa (almost one-fifth of NZ’s GDP), while employing around 50,000 New Zealanders and serving almost one-in-three New Zealanders as members.
“While providing scale and diversity, these businesses and organisations also offer endurance and sustainability. Of Cooperative Business NZ’s current 63 Full Members, over two-thirds are now more than 20 years old while five – including Fonterra – are now over 100 years old.
“Co-operatives, mutuals and societies have provided trusted products and services to New Zealanders for decades and even centuries. Brands include Fonterra, Anchor, New World, PakNSave, Four Square, Alliance, Silver Fern Farms, Farmlands, Southern Cross Health Society, Mitre10, Farmers Mutual Group, SBS Bank and The Co-operative Bank.
“Together, they help to provide us all with a strong and sustainable economy, stability and secure employment. Why would we want to change that?” Craig told journalists.
As we know, the co-op business model is about being member-owned rather than investor-owned, members with “skin in the game” that are here for the long term, while investors could be here today and gone tomorrow with foreign investment leading to profits not being retained locally.
Fonterra’s financial performance in 2017/18 has not been impacted by its co-op status, Craig said.
“In fact this is a key strength and founding pillar of the organization with financial benefits for milk supplied provided to its shareholders (members) only, profits retained locally and, most importantly, 100% local shareholder ownership and control of the organisation.
“Fonterra remains solely within the control and hands of its dairy farmers and long may that continue!” Craig said.
14th Sept 2018