KEY POINTS:
A senior dairy farming leader wants a review of farmer levy-funded R&D scrapped, amid further tension over the $28 million a year allocated by research funder Dairy InSight.
The review - initiated by the Fonterra Shareholders Council with input from dairy companies - is due to be completed
next month.
But, writing in the latest Federated Farmers magazine, Dairy Farmers of New Zealand chairman Frank Brenmuhl said the review should be canned.
He said neither the council or the Dairy Companies Association had the right to carry out the study of what was farmer money being allocated by Dairy InSight.
"Once again farmers are being told that big daddy knows best. We are told that we are incapable of making decisions about how to invest our money without consulting our processing company. Not true."
Farmers had a right to invest in research without processing company "interference" and to choose Dairy InSight as the vehicle for deciding how to allocate the cash.
Brenmuhl told the Business Herald he had no legal remedy to stop the review but said he saw "vested interest in this all the way down the line".
He said the review's terms of reference focused solely on Dairy InSight and he believed dairy companies wanted to "subsume" the funder.
There has been speculation the review was aimed at squeezing out Dairy InSight because it had been too strongly focused on farmers rather than dairy company interests.
Brenmuhl believed companies had been relying on on-farm innovation to mask their lack of performance.
"Now that farmers are not being able to get these gains the performance of the processing companies is being highlighted."
He noted that Fonterra, with annual sales of $13 billion, had hoped to be a $30 billion operation within 10 years of its inception.
"We're halfway down the track and that's not happening ... if you look at the rate of growth there's no way you're going to get that in another five years."
Fonterra Shareholders Council chairman John Monaghan believed Brenmuhl was "badly missing the point" of the review.
He said he had had nothing but support from other farmers for the review.
"They want accountability in every area of our business."
Suggestions that the review was aimed at squeezing Dairy InSight out of the funding picture was "absolute nonsense", he said.
"As representatives of the people who contribute [the bulk of the levy] I think we certainly have a mandate to do that [organise the review]."
Two terms up for shareholders' chairman
Fonterra Shareholders Council chairman John Monaghan is to retire.
He said yesterday he had always intended to serve only two terms as a councillor and would not seek re-election in March.
Monaghan, who last year publicly blasted Fonterra's payout and the performance of its value-added business, has been on the council since the co-op was formed and was elected chairman in 2003.
Recently he has been adamant that any changes to Fonterra's capital structure - such as a mooted sharemarket listing - must not compromise ultimate farmer control of the business.
These potential changes and other issues affecting farmer investments meant the council's role would remain very important, Monaghan said.
"Farmers have proved they are willing to embrace change, as long as it is in the long-term interests of the industry."
