Willy Leferink says to Fonterra, if you want peace don’t call the lawyers

By Willy Leferink*

They say bad things come in threes.

We’ve had the news Fonterra is going to “vigorously defend any proceedings” taken by Danone against it for US$400 million.

In recent days, Fonterra Brands has voluntarily recalled 330ml and 500ml bottles of fresh cream sold under the Anchor and Pams brands in the upper North Island. 

As a farmer you wonder, what’s next?

First of all Fonterra is doing things by the book in voluntarily recalling affected bottles of fresh cream stamped “best before 21 January”.

Visit foodsmart.govt.nz and you’ll quickly learn that food product recalls happen irrespective of who’s in government.

In 2008, there were 19 recalls versus the 14 last year and they have involved everything from hash browns to fish fillets to soy milk powder.

While the timing of this is far from ideal given last year’s events, this voluntary recall came from Fonterra’s own testing.  It shows consumers that a company owned by thousands of Kiwi farmers puts food safety first.

When consumers take a Fonterra product off the shelf, they deserve to know someone back at Fonterra is testing it. 

While many farmers will be less than pleased, they also know that rolling the dice and ‘she’ll be right’ has no place at the company they own.  Food safety is paramount.

I also imagine executives at French company Danone and their local lawyers will be wearing a wry smile.  With the news Fonterra is going to fight Danone in the courts there is only one guaranteed winner; the lawyers.

While this fresh cream recall is small in scale, the cost of it and any legal action with Danone ultimately falls upon Fonterra’s farmer-shareholders.  That could be by way of the already slashed dividend, the milk price forecast, or both. 

I am not suggesting that Fonterra should rollover and let Danone tickle our collective tummy for large sums of cash.  What I am suggesting is that there needs to be a commercial settlement. 

I hope the Danone case never sees the inside of a courtroom. In fact, I wish the word court had never made an appearance at all, but we are not in charge of Danone   Go to Fonterra’s website you’ll read, “We have generations of dairy expertise behind us and generations of dairy innovation to come. Every day, our knowledge, people and products combine to bring the best of dairy to the world and the best returns back to our farmers”.  

How does that now square with a former major customer saying “see you in court?”  How does that look to our other customers?

Danone, like any company, is answerable to its shareholders and the food scare hit them for six.  I am certain if the shoe was on the other foot then we’d be baying for action.  I am questioning if legal belligerence is our best response. 

When that non-botulism scare broke I told the media that the customer is always right because trust is the biggest asset we have.  Something I hope the voluntary fresh cream recall proves. 

Farmer shareholders of Fonterra and the company they cooperatively own are entrusted to produce products with integrity and honesty.  It was Fonterra who rightfully passed on information and pulled the red-card on WPC80. Just as it has now done domestically with these bottles of fresh cream.

Both products do not involve large volumes, nor are they high value either, but they demonstrate how easy our weakest link can trip us up.

The 2013 Independent Fonterra Board Report into the non-scare revealed a catalogue of things to be fixed as did the Government’s own report.  We’ve got to take these lessons and move on.

While it’s a different country and a very different issue, back in the 1980’s, McDonald’s learned the hard way when you unleash the lawyers. The “McLibel” case became a 20-year running sore and a text book example for how to lose control.   

Okay, this won’t because it doesn’t involve a bunch of activists but given the overseas media calls I have received, it could still run away with Fonterra’s reputation. 

Fonterra has had many distractions over recent years like its capital structure.  This leaves me wondering if some of the hiccups of late, including production capacity, may boil down to eyes not being on the ball.

Maybe it is time for our Board to focus on the business of taking our high quality milk and adding value to it.

As for Danone and consumers who may now be put off our fresh cream, my hope is that you’ll appreciate there is testing and integrity behind what we produce.

We never want to compromise food safety as you are customers that we farmers want to win back.

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Willy Leferink is Federated Farmers Dairy Chairperson. This article first appeared in the NZ Herald. It is used here with permission.