A Capital Idea From Fonterra -- June 2021

 When Fonterra was legislated into existence back in 2001, the newly formed co-operative took the simple and pragmatic approach of adopting the capital structure format used by its predecessors; farmer shareholders had to own one share for every kilogram of milk solids they supplied.

If you wanted to supply Fonterra you had to buy shares from Fonterra and, if you exited the Co-operative, they would buy the shares back off you.

This format worked well for the next seven years. Then there was a massive increase in dairy conversions and, as most of those new farms had no choice but to supply Fonterra rather than a competing milk processor, way more shares were being bought than sold.

Synlait’s appearance on the scene for the 2008/2009 season, and to a lesser extent Open Country Dairy in 2005/2006, was a game changer. Suddenly Canterbury farmers had the option of supplying an independent processor and receiving practically the same payment for their milk without having to hold expensive shares. There was almost no risk involved as legislation compelled Fonterra to supply independent processors with milk at cost, ostensibly for domestic consumption, which was then processed into high value ingredients for export.

With the average Mid Canterbury dairy farm holding 300,000 Fonterra shares, each farmer exiting the Co-op to supply a competitor was costing Fonterra some $1.35 million with share redemptions alone. The declining share price, from $6.79 in the 2006/2007 season to $4.47 in 2008/09, only hastened some farmers’ exit from the Co-op.

Fonterra identified this redemption risk, great sums of money washing out of the company to buy shares back from exiting farmers, and in 2012 a change to the capital structure of the Co-op was voted on and adopted; Trading Among Farmers (TAF).

Essentially TAF allowed the public to buy non-voting (dry) shares in Fonterra which would entitle them to a dividend, and farmers who were leaving the Co-op could convert their supplying (wet) shares to dry shares when they left and sell them in this market. Creating this fund protected Fonterra’s balance sheet by shielding them from the cost of redeeming the shares and provided a new mechanism for valuing the shares.

TAF, of course, was incredibly short-sighted but typical of the way Fonterra operated at the time. It only addressed one issue, the threat to Fonterra’s balance sheet, and ignored systemic problems like the high cost of becoming a Fonterra supplier and the fact suppliers were still leaving the Co-op in favour of independent processors. The proponents of TAF seemed to assume milk supply would continue to grow and Fonterra’s share of that supply would remain stable. In fact, milk supply leveled off shortly after the introduction of TAF and Fonterra’s share of the milk pool fell from a high of 96% to its current level of around 80%.

I still recall the urgent, almost desperate lobbying of farmers to vote in favour of TAF. There were no alternatives offered and TAF was presented as the only solution to a desperate problem. Farmer feedback wasn’t sought in any meaningful way and the scheme was ultimately passed through gritted teeth as suppliers felt they had no other option.

The proof TAF was not the solution Fonterra needed can be seen in the fact capital structure changes are being explored again a mere nine years after its implementation, but this time things feel very different.

This time Fonterra wants to address the underlying issues that affect the Co-op; the high cost of entry and the compulsory requirement to invest huge sums of capital just to supply.

After researching and discarding many different models, the one they have chosen to present to suppliers centers on farmer choice. Farmers would only be required to hold one share for every four kilograms of milk solids supplied and could then choose to buy more shares if they felt the Co-op’s performance warranted it.

In one move this drastically slashes the entry cost of being a new supplier and allows existing suppliers to free up as much as 75% of the capital they have invested in shares.

Share value would no longer be determined by the trading actions of private investors but rather by the company’s performance over time, a useful metric for assessing the performance of both Management and the Board.

The real difference though is that this time Fonterra is having a conversation with their shareholders. The Board and Senior Management are touring the country and saying, “these are the problems we face and this is the solution we have come up with, what do you think?”

Then they listen.

Fonterra has real diversity in their shareholder base in terms of range of ages and stages, objectives, goals and aspirations. The Co-op has realised the one-size-fits-all compulsory capital structure currently in place that requires all shareholders to hold shares on a 1:1 basis is a key factor in farmers deciding to leave and they have proposed a solution.

Regardless of the outcome of the vote at November’s AGM, and I hope the proposed capital structure changes win the approval of shareholders, suppliers can take heart that this proposed change to our constitution has been approached with a sense of purpose, maturity and collaboration that has been lacking in the past.

Trade With China -- May 2021

As a dairy farmer, whenever I am asked what I think is the greatest risk to farming in the foreseeable future I invariably and only half-jokingly reply that it is politicians. I wasn’t laughing recently, however, when Brook van Velden, the ACT party’s foreign affairs spokesperson, submitted a motion to Parliament asking MPs to declare China’s treatment of the Uyghur people a genocide. She had the full backing of her leader, David Seymour, who boldly exclaimed “We shouldn’t care about trade and declare a genocide in China”.

This somewhat idealistic proposition came hard on the heels of the Labour Government being criticized by their Five Eyes partners for being too cosy with China. Five Eyes, an intelligence gathering and sharing arrangement between the United States, Canada, United Kingdom, Australia and New Zealand, has in recent times tried to expand its remit into other areas of policy. These policy statements are invariably some kind of criticism of China, but New Zealand has annoyed its Five Eyes partners by charting their own course and not signing on to these statements.  

New Zealand exporters have looked on in horror as Australian politicians continue to needle China in the most undiplomatic fashion as only Australians can, from being the most strident in calling for an independent investigation into the origins of Covid-19 to openly discussing the possibility of war with China, if there has been a button to push then Australia has found it and pressed it hard.

The Chinese response has been swift; they have stopped importing rock lobsters which has crashed the price in Australia from $80 per kg to $25; tariffs on wine of 220% have been imposed for the next five years, barley exports have halted after tariffs of 80.5% were introduced and China have banned imports of beef from four of Australia’s largest abattoirs.

Despite this and the immense pain being felt by producers across Australia, their exports to China grew on the back of increased demand for iron ore. Australia and the United States, who also engaged in a trade war with China under former President Trump, have large enough economies and domestic markets to weather these storms. New Zealand does not.

Way back in April 2008, Helen Clark’s Labour Government made history when New Zealand became the first developed nation in the world to sign a bilateral free trade agreement with China, an agreement that was pivotal in softening the impact of the impending global financial crisis on this country. Under the agreement, 37% of Chinese exports to New Zealand and 35% of New Zealand’s exports to China were tariff free by October 2008. By 2019 a whopping 96% of New Zealand’s exports to China were tariff free and this year the agreement has been upgraded. It is the most comprehensive free trade agreement we have with any of our trading partners, including our Five Eyes allies.

Free trade with China has also been an essential component in our rapid recovery from the financial effects of the global pandemic, dairy exports remained almost unaffected, and farmers enjoyed sustained high prices for their raw milk. For the year ended June 2020, China bought $32.4 billion of the $86.4 billion worth of goods New Zealand exported: that is a massive 37.5%.

None of this is to say New Zealand should remain silent or bow down to China’s every wish, Foreign Affairs Minister Nanaia Mahuta struck the right chord when she said the relationship should be one of mutual respect. New Zealand refused to allow Chinese company Huawei to bid for the right to build our 5G cellular network due to well founded security concerns, and Parliament unanimously declared severe human rights abuses are occurring against the Uyghur people in China’s Xianjiang province.

Despite David Seymour’s headline grabbing statement we absolutely should care about trade, we’re too small not to.

Risks To Our Industry -- April 2021

On the 14th of August 2020, Gulf Livestock 1 left the Port of Napier bound for China carrying 43 crew and 5,867 cattle. Seventeen days into its journey, after sailing into the path of a typhoon and losing power to its engine, Gulf Livestock 1 capsized with only one crew member surviving and all the animals on board perishing.

This tragedy spurred the Government to suspend live export shipments while a review was undertaken. Two months later shipments resumed but the writing was on the wall, public sentiment had been heavily against the practice for years, and last week the Government announced shipments of live animals would be phased out over two years’ time.

It doesn’t matter that the sinking of Gulf Livestock 1 was a maritime disaster unrelated to its cargo, the vessel had been flagged in both Indonesia and Australia for poor engine maintenance and improperly filed voyage plans, or that it was the only vessel to head directly into the typhoon while all the other ships in the vicinity sought shelter.

Nor does it matter what the conditions were like on-board more modern livestock carriers; how much feed is available; how many vets are on call or even if that the animals gain weight on their journey. What matters, especially to a Government that seems to have lost its way and is treading water on more pressing issues, is that banning live exports will make a lot more people happy than it annoys, and the people who do get annoyed by the ban probably weren’t going to vote for them in the first place.

Halting live exports has been Green Party policy for a very long time so it was inevitable a Labour Government would eventually enact it; after all it’s much easier to ban things than to actually do things and, providing our trading partners don’t take exception, there are no downsides.

Activities that we farmers undertake without second thought may in fact be very large risks to our industry, and the live export of animals was one such risk. If enough people object to a farming practice, regardless of the facts of the situation, we slowly begin to lose our social license to operate. We lose public support, and it becomes increasingly more attractive for the Government of the day to take action.

Objections to a particular activity don’t always come in the form of protests from people with a penchant for chaining themselves to trees, sometimes they come from a displaced people overseas lodging papers in our very own High Court. The Western Sahara Independence Movement are currently suing the New Zealand Superannuation Fund for investing in farms that are fertilised with what they claim is illegally mined phosphate, and before you dismiss this action you should know they’ve already had success in South African courts and stopped phosphate shipments from leaving port.

New Zealand has hardly covered itself in glory in the past when it comes to sourcing phosphate, today the Pacific island of Nauru is 80% barren wasteland as a result of phosphate mining and Ocean Island is in an even worse state, being left largely uninhabitable and most of the residents displaced to Fiji. Having completely depleted those sources we now import the essential mineral from the Western Sahara.

The Western Sahara was forcibly occupied by Morocco in 1975 and the ownership of the mineral rights are contested to this day. The occupiers are not internationally recognized and we remain the only Western country in the world that still allows imports from this region. I won’t make any predictions as to when we will join the rest of the world in an import ban, public awareness isn’t yet great enough for the Government to feel pressured into making a move. I sincerely hope both Ballance and Ravensdown are working hard on a Plan B.

Long before the Government moves on phosphate I suspect they will set their sights on palm kernel; the use of the supplementary feed is widely publicised and debated though I feel it is poorly understood. Banning its use would win almost universal public support despite the fact palm oil, the driver of plantation expansion in Indonesia, is in almost every product we consume. Trying to limit deforestation in Indonesia by banning palm kernel would be like trying to reduce beef consumption in New Zealand by banning leather sofas, though I suspect a leather sofa ban would upset significantly more people than one on palm kernel. Much like live exports, halting the use of palm kernel would allow people who are unaffected to feel good, and they by far outweigh the number of people who use the stuff.

Unfortunately, there is an issue at hand just as emotive as live exports and even more poorly understood than palm kernel; bobby calves.

For a cow to produce milk it must first become pregnant and bear a calf. About a quarter of the resulting calves are reared as replacements for the dairy herd and a good portion are sold to be reared for beef production. The remaining calves, some 1.8 million each year, are sent for slaughter in the first week of their lives.

An enormous amount of work has been done to ensure these calves’ welfare; from rearing to transport to slaughter, but an increasing portion of the public are finding the practice unpalatable.

The only reason I can think that it hasn’t been moved on sooner is there’s no easy solution. Simply banning the activity would only see the calves slaughtered on farm and requiring them to be reared for longer before transportation would probably see a similar result.

I have seen well-meaning people suggest the use of sexed semen as a way of eliminating bobby calves, but this just highlights the lingering misconception that bobbies are bull calves and only killed because they cannot produce milk, in fact a bobby calf is any calf that is surplus to requirements regardless of sex.

The use of sexed semen, which may ensure every calf born is a heifer, would just mean more of the surplus calves were female. We’re not in a position to rear more replacements, the Climate Change Commission makes that very clear, and exporting the extras to China is no longer an option.

Just because there are no easy solutions to issues like bobby calves or where we source our phosphate from doesn’t make them any less of a risk, and it would be far better if the farming community could come up with solutions before public pressure forced the Government to take action. After all, it’s much easier to ban things than to do things.

Farmers and Government Working Together -- March 2021

I had a sheep farming friend in Otauau, Southland, who once took me on a tour of his property. It was immaculate, a mixture of flats and gently rolling hills with the steeper areas planted in native bush. As we drove around the farm John outlined his plans for converting the flats to dairy, the value of his land had been swept along with the tide of conversions around him and the banks were very keen to lend him as much as he needed.

John knew exactly where the shed would go, how the paddocks would be subdivided and which areas would remain in sheep to keep his son interested in the farm. When the tour was finished and we were relaxing with a cold beverage, I asked when the conversion was going ahead so I could schedule my move to manage the new dairy block.

“You know Craig”, he said, “the plan makes perfect financial sense but I’m never going to do it, I just hate mud too much.”

I think David Parker, Minister for the Environment, would have liked John. I’m not sure the feeling would have been mutual but they could have bonded over their shared hatred of mud. David Parker hates to see cows in mud, he hates to see muddy paddocks waiting to be resown and most of all he hates to see mud making its way into our rivers.

Parker hates mud going into our rivers so much that, while in Opposition, he started legal proceedings against a couple of Regional Councils for not exercising their powers to stop it happening.

The impacts of poorly managed intensive winter grazing have been well publicised in recent years. Every form of winter grazing requires you to limit the animal’s intake to a level needed to maintain or slightly increase their body weight, but the use of high yielding crops means the area needed to supply that animal’s intake has reduced considerably.

I winter my cows on oats which yield 5 tonne of dry matter per hectare, so each cow needs about 20 square metres per day to eat 10kg of oats. If I were to feed them on fodder beet instead, which can yield 20 tonne per hectare, each cow would only need 5 square metres per day to get their daily intake of fresh feed. This is where the intensive part of winter grazing comes from, a lot of animals in a relatively small area. They’re still being adequately fed but the management has to be top notch, the consequences of an adverse weather event are potentially disastrous for land and animals alike.

Southland winter grazing practices came under intense scrutiny recently with activists flying drones over cattle stuck in mud and cropping still photos to show farming practices in the worst possible light, but way back in 2017 Parker toured the country with pictures of dairy cattle pushing sediment into the Mataura River. Action was inevitable, with or without the drone flying vigilantes. That action came in the form of Damien O’Connor, Minister of Agriculture, appointing a taskforce to investigate the issue and come up with solutions.

As a direct result, intensive winter grazing rules were drawn up and poised to come into effect in May 2021. Unfortunately some of these rules were simply impractical and unworkable, a point the government conceded when they relaxed them a little after some Southland farmers threatened to boycott the proposed regulations.

Unfortunately, some of the data used to set the contentious winter grazing guidelines was shonky at best, the 10-degree slope idea comes from a 25-year old non-peer reviewed USDA paper that itself says the data is inconclusive and conflicting. A Manawatu study showing sediment losses were “five to eleven times higher than pasture grazing the previous winter” was comparing an average year to a drought year. It’s no wonder Southland farmers were up in arms.

Then something interesting happened, instead of getting on their tractors and marching on parliament in futile protest, the Southland Advisory Group swung into action. Comprised of Environment Southland, NZ Beef & Lamb, DairyNZ, Fish & Game, Federated Farmers and iwi, the Group set about reviewing the heavily criticised winter grazing rules which they feared were unworkable and would lead to perverse outcomes.

The Group wanted winter grazing managed through a specific module in each farm’s Farm Environment Plan and set about providing the Government with farmer led solutions that would deliver the same outcomes without the need for regulations. Solutions that would be closely monitored and reported on by the Regional Council.

The Government listened. At a recent DairyNZ stakeholder meeting David Parker announced the Government would take a pragmatic approach and delay the implementation of the grazing rules by a year while the Southland Advisory Group implemented their plans.

This is the sort of constructive action I’ve been wanting to see from farmer advocacy groups for years, and full credit to those people who made it happen. Southland farmers have a single winter to prove they can deliver environmental outcomes without the need for strict regulation, and the outcomes will be very public.

The Green Party aren’t happy, Forest and Bird aren’t happy and Greenpeace are livid, but I think John would be quietly stoked. He was a man who liked to solve his own problems, and boy did he hate mud.

Cows, Coal and Carbon -- February 2021

I was once told by someone much smarter than me that the Green Party policy of today will be Labour Party policy in 10 years’ time. Even without that level of insight, nobody who has been paying attention to the political discourse for the past decade will be very surprised at the Climate Change Commission’s recent report, though there do seem to be large numbers of people shaking their heads in dazed bewilderment.

The Commission’s report largely reflects the findings and recommendations of the Royal Society’s 2016 one, Transition to a Low-Carbon Economy for New Zealand. That report was essentially ignored by the government of the day, but it is extremely unlikely the current government will treat the latest version in the same manner.

The report calls for, among other things, an immediate end to the construction of coal fired boilers, an end to the burning of coal for process heat by 2037 and a reduction in the national dairy, beef and sheep numbers of 15% each by 2030.

No matter how climate hesitant you might be or how little New Zealand has contributed to global warming since pre-industrial times, the Commission estimates that figure to be 0.0028 degrees C, the fact remains our share of global warming is 4 times greater than our share of the total population and 1.5 times greater than our share of landmass.

While Fonterra have already committed to not installing any new coal boilers or increasing their capacity to burn coal, suppliers have every right to be disappointed that action was not taken far sooner and far quicker. Coal is the low hanging fruit of climate change and we’ve known for decades that we needed to reduce emissions. We didn’t and now farmers are bearing some of that cost through animal reduction targets.

Getting out of coal is possible though expensive and difficult. Tolerance for offsetting emissions has worn thin so tactics like buying a forest in order to keep burning coal are off the table. Likewise ignoring the government in the mistaken belief they have no teeth to enforce the phasing out of coal; the simple act of raising the cost of carbon to the point where using coal is uneconomic would soon force change.

Lobbying to exclude energy from the recommendations would have consequences for other areas; the whole report is a finely balanced tension between farming, transport and energy. If savings aren’t made in one sector they have to be picked up by another, and I’m certain farmers already feel like they’re picking up enough of the tab.

Complicating the transition from coal is the fact many of Fonterra’s North Island plants are primarily fuelled by natural gas, a resource that is predicted to run out at the same time as coal usage is slated to stop. This puts even more pressure on the Co-operative both in terms of capital expenditure and closing plants to refit the boilers; nearly every single boiler will have to be changed.

As with coal the Climate Change Commission’s targets for stock reduction seem ambitious at first, 15% fewer dairy cows by 2030, but that only equates to a reduction of 1.7% per annum. This is easily achieved by slightly lowering the replacement rate of animals lost through natural attrition.

The Commission predicts these lower animal numbers will have no impact on milk production, and this is borne out by Livestock Improvement Corporation data showing production increases via genetic gain sit at 1.8% per year, almost exactly matching the annual drop in cow population. The opportunity is there through careful breeding to allow cows to express their genetic merit by gradually dropping the stocking rate while production remains constant.

Of course, if the lower stocking rates are offset by higher use of bought in feed any emission reductions will be cancelled out.

The report also mentions land use change, a phenomenon that is already happening in areas like Tasman where many dairy farms are being planted in hops, and in Golden Bay with a number of dairy farms closing down due to frustration with compliance obligations or a desire for a less stressful lifestyle.

There’s no one single solution that will allow us to meet the ambitious GHG targets that are laid out in the report and keep farming the way we are. Based on the science that the NZ Greenhouse Gas Research Centre are aware of, a combination of all the science and changes to land management are likely to get us there, but we must have faith in the scientific solutions and keep funding them to succeed.

Daigou Disaster -- January 2021

It is surprising how quickly a company’s fortunes can change; the A2 Milk Company (A2MC) played a dangerous high-stakes game, relying heavily on an informal network of Chinese students and personal shoppers to distribute much of its product into China. It’s a game that has cost other companies dearly in the past.

Daigou, buying on behalf, is a network of Chinese nationals living in or visiting Australia who buy local products and ship them back home to groups of friends, customers cultivated via the social media app WeChat. It is not uncommon for Chinese tour groups to visit stores like the Chemist Warehouse and buy products in bulk, much to the ire of locals.

Such is the demand from China for Australian packaged products that in 2019 a Sydney store owner was found to have stockpiled 4,000 1kg tins of baby formula ready for export.

Covid-19 has stopped daigou in its tracks with Chinese students and tourists no longer able to visit Australia now or for the foreseeable future. In December A2MC slashed its full year earning forecast from $1.8 billion to $1.4 billion and saw its share price dive by 23%, placing the blame squarely on interruptions to the daigou channel.

A2MC’s misfortunes are not, of course, confined to themselves. As a shareholder of Synlait and one of their largest customers, they are dragging Synlait’s share price and profitiability down with their own.

Daigou grew from a handful of personal shoppers to a multi-billion-dollar backchannel into China in the wake of the 2008 baby formula scandal, a disaster which left 300,000 Chinese infants sick. Confidence in local supply never recovered and demand for Australian product in the original Australian packaging skyrocketed

The daigou channel has been the making and the breaking of more than one publicly listed company in Australia. New e-commerce regulations introduced by China in 2019 saw many smaller daigou purchasers exit the market due to more onerous paperwork. Some goods attracted higher safety requirements than had been needed before and were also subject to stricter tax requirements, regulations that had an immediate negative impact on vitamin maker Blackmores. Blackmores, who had been experiencing double digit growth on the back of daigou transactions, saw sales immediately slump and their share price drop by 23% while $531 million was wiped from their valuation, setbacks from which they never fully recovered.

Analysts at the time were concerned A2MC would experience the same troubles as Blackmores, but they were quickly assured that the new Chinese laws didn’t affect baby formula and business continued apace.

A similar fate befell Bellamy’s Organic Infant Formula in 2017. After a meteoric rise on the daigou wave and taking 21% of the Australian market share, Bellamy’s started discounting their infant formula through their official online Chinese channels. Bellamy’s had a strong presence on online retailer Alibaba and began participating in their famous “Singles Day” sales. Daigou shoppers, who didn’t have access to these discounted prices in Australia, found their margins slashed and abandoned Bellamy’s Organic in favour of A2 Platinum infant formula.

Bellamy’s, who were suffering from other issues as well, never recovered from being deserted by their daigou shoppers and have now been taken over by the Chinese Mengiu Dairy Company. The A2MC stepped in to fill the void and have been reaping the benefits ever since.

Given the tensions between China and Australia and the uncertainty over when international students will return it remains to be seen if the A2 Milk Company can buck the trend and survive the collapse of its daigou channel.

A2MC once had a unique, premium product but now they’re facing stiff competition, with nearly every dairy company with a presence in China putting A2 products on the shelves as fast as they can to take advantage of the sudden void.

Once Chinese consumers abandoned Bellamy’s Organic in preference for A2 Platinum they never came back, it is not yet clear whether they’ll return to the A2MC fold once the Covid induced dust finally settles.

Wannabe Lobbyists -- November 2020

An exchange on Twitter caught my eye this week; a Waikato dairy farmer had landed a new 50:50 sharemilking job for the next season and was posing proudly with his family while holding a copy of his new Federated Farmers Herd Owning Sharemilking contract.

After some light hearted banter, the farmer was asked when he was going to sign up and become a Federated Farmers member. Tongue firmly in cheek he replied that, contracts aside, the only good thing to ever come out of the old boys club that was Feds was that they fought to keep Rural Delivery going. It was pointed out to him that Federated Farmers advocate strongly on local and central government issues for farmers. “What then,” he quite reasonable asked, “is the difference between Federated Farmers and DairyNZ?”

This was an excellent point and made me ponder what exactly the groups advocating on my behalf deliver, and is it what I want.

In recent years Fonterra has moved from arguing with everything the Government announces to constructively working with those in power. Despite lingering accusations from some farmers that this is “sucking up”, the Co-operative has been able to make significant gains in areas like the Dairy Industry Restructuring Act (DIRA), and softening the impact on farmers of polices like freshwater reform and zero carbon. Fonterra does these things because they’re good for Fonterra and their farmers, so I’m happy for them to continue down this path. By happy coincidence I think the leadership role they’ve taken on environmental issues is also good for the country, and I’ve made good use of the support offered to farmers in the form of their Farm Environmental Plan services.

The Fonterra Shareholder’s Council is another entity that shifted into a farmer advocacy role when that’s not really their function. This was most obvious to me with the SHC’s press release on proposed changes to DIRA, while no doubt reflecting some farmer’s views it was quite inflammatory and at odds with Fonterra’s stance. I understand the SHC is not Fonterra but too many people, politician included, don’t differentiate. The SHC definitely has a farmer advocacy role to play, but that is by supplying farmer feedback directly to Fonterra’s Board, not by issuing press releases with their opinion on Government policy.

DairyNZ receive a levy from all milk producers in New Zealand and have used this to pay for research and development to make all dairy farmers more efficient and profitable. I still have a ring binder in my office with their Facts and Figures for Farmers series that I bought while at university. While the internet has made my ring binder obsolete, DairyNZ has always been the go to place to find up to date resources and data about the New Zealand dairy industry. With that in mind it’s disappointing that they seem to be changing their focus to that of a being a lobby group. To my mind, DairyNZ should be in the background supplying the scientific muscle to support farmers and farmer advocates.

Federated Farmers is the organisation that was set up to advocate for all farmers at both local and central government levels and their strength is in their broad membership base. Each region knows their catchment intimately and can focus their local knowledge on an issue with laser like intensity. This strength can also be a weakness because, at a local level, the battle is often being fought by members who still have the mind-set that working with the government is the same as sucking up to them.

Federated Farmers care deeply about whatever issue is in front of them at the time, and they will fight to the death for farmers on that issue, but you don’t need to win every battle to win a war and trying to win every single battle is not always the best tactic.

I am not for a minute pretending Government relations is easy, and I don’t envy Federated Farmers for the scale of the task they have, a task that seems to be made more difficult by the regional groups saying whatever they think is necessary to keep their members happy.

As the person who pays DairyNZ, Fonterra and Feds, I’d like to see them helping to protect my business by sticking to their strengths, and I’d like every other wannabe farmer lobbyists to get out of their way and let them get on with it.