In my view either of these issues are justifiable reasons for Fonterra to come back to farmers and inform us there is an issue to address. But they need to be upfront as to what the actual situation is.
There's reasons why we should be informed and why we should take action. On farm is the first stage of the food chain that delivers a source of nutrition to the end consumer.
We need to have a clear and unambiguous knowledge of what exactly the consumer wants.
We need to also ensure they get the experience they want, and if there are quality factors, we need to understand those too. The vast bulk of that customer experience is due to what happens on farm and so we should make sure that what happens on farm is in line with what the market wants.
If we ignore what the customer wants, they will duly switch to people who can cater for their tastes. So if there truly is a premium for pasture-based produce then we need to know.
However, will this guidance actually do anything for encouraging farmers in the right direction? Maybe for some, not for others.
Here's the issue, I'm a farmer who has high usage and I have a neighbour who is the same. I reduce stocking rate to reduce PKE usage and help with the marketing image, or the quality control issues, my neighbour however doesn't.
If the positive image continues then "yay", I get a pat on the back for upholding the industry's image and premium price. My neighbour meanwhile gets to make more milk and benefit from that premium price too.
Still, if there are too many like my neighbour and our reputation and premium takes a hit, then I take the hit in price along with my neighbour, though they still get to produce more milk.
We are relying on everyone to think about the greater good and ignore the individual benefits from going against that greater good.
Now if the issue is about a quality like, say, somatic cells, then Fonterra's "guidance" has the same problems - those that listen to it get no extra and will again end up paying for those that don't.
So if we want change then let's signal that desire for change with a price signal.
Other companies such as Synlait have such an approach. For me if Fonterra are concerned by the use of PKE and other such factors, then providing that price signal is important.
So for consumer perception the price signal could take the form of some sort of bonus. In terms of quality issues, well, then it needs to be treated just like somatic cells, for example.
I would have handled this PKE issue differently with an upfront discussion with all industry players first, then raised the issue on the director's roadshow, and got rid of the bloody spin.
If the issue is milk composition then say so and we can start a discussion around how this would be tested and what the demerit system would look like.
If it is truly about consumer perception, then again discuss with farmers and get their feedback on what's the best way to tackle it.
The intent from Fonterra is likely correct, the execution and communication with farmers is sadly lacking.
-Andrew Hoggard is Federated Farmers Dairy Chair
-Views expressed here are the writer's opinion and not the newspaper's. Email: editor@hbtoday.co.nz
