Monday, 17 June 2019

Oh DIRA -- June 2019


As a Fonterra supplying dairy farmer you have every right to be disappointed with the release of the Government’s changes to the Dairy Industry Restructuring Act (DIRA).

Fonterra will still have to supply raw milk at cost to new, presumably foreign owned processors who can then export value-added product in direct competition with the co-op, all without having to establish their own supply chain.

Fonterra will still have to accept new milk under the open entry provision, albeit with a few tweaks around new conversions and environmental concerns, which is worrying enough, but wait until you delve deeper: the flawed reasoning behind keeping this provision is MPI’s  belief Fonterra can already control supply through the milk price. How this belief persists when legislation exists specifically to prevent milk price manipulation is beyond me, and this is where my disappointment turns to anger.

How the Minister can be expected to overhaul vitally important legislation when the people in MPI advising him seem to have little understanding of the dairy industry and the rules constraining it defies belief. On one hand there’s a recommendation the Minister appoint someone  to sit on the milk pricing panel, and on the other there’s a recommendation that totally ignores the reason for this panel’s existence.

So I’m disappointed and a little angry, how should I react?

I could get on twitter and give Damien O’Connor a serve, I know he does his own social media and interacts with the public. In fact when Genevieve Toop, Greenpeace’s sustainable agriculture campaigner, tweeted that the government’s stance on open entry was a disaster, the Minister interacted quite forcefully: “Absolute bullshit”, he replied.

While cathartic, getting angry on twitter is ultimately pointless. The Minister would probably ignore me, but there’s always the chance I could make him think farmers are dicks and that’s possibly not the best approach when he’s got something I want.

Let’s not forget that only a year ago this government really did think farmers and Fonterra were dicks, Shane Jones launched a sustained and blistering attack on Fonterra’s chairman at the time, John Wilson, and when he wasn’t reined in by his party’s leader or the Prime Minister he doubled down. Fonterra had spent the better part of a decade acting like a farmer advocacy group rather than a politically neutral, multi-billion dollar international company and the incoming Labour-led coalition government didn’t like them and weren’t afraid to show it.

What interests me is how our industry leaders have reacted to the DIRA annoncement, they are representing my views and theirs is the lead I should follow. They are the ones who get to meet MPs and will make submissions on my behalf.

Federated Farmers who can always be relied on for a good bit of outrage were, surprisingly, not outraged at all. They expressed disappointment with some parts of the release, highlighted the parts that gave them hope and expressed enthusiasm at the prospect of making submissions on the changes.

John Monaghan, Fonterra’s Chairman, was the epitome of diplomacy. He voiced cautious optimism and signalled a willingness to work with the government to make changes that were not only good for Fonterra, but good for the country and good for the environment. If John was disappointed he hid it well, his was the response of a man who knows Fonterra have come a long way in the face of a hostile government and Fonterra will ultimately gain more from having a constructive rather than combative relationship with the Government. He recognised the progress made for what it was and welcomed the opportunity to take those changes further.

Then we have Fonterra’s Shareholder’s Council. It has always been my understanding that they are there to represent farmer’s views and concerns to the Fonterra board, to review the board’s performance, to create a healthy tension and keep the board accountable, but they seem to have been popping up in the media lately expressing opinions on all manner of things.

In contrast to Federated Farmers and Fonterra, the Shareholder’s Council wrote a very angry press release containing phrases like “continue to kick the can down the road”, “a step too far” and “in direct conflict”. It read like a declaration of war, that they were there to fight, to argue, to be outraged.

It feels to me as if for every two steps the industry takes forward there’s always someone willing to take us a step back. Now is the time for diplomacy, to put forward reasoned arguments for change. As an individual who will never come face to face with a government official I can afford to throw some angry words at MPs, the people advocating for my industry cannot.

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