The biggest hurdle of the year, the outbreak of Mycoplasma bovis proved devastating for individual farmers, businesses and the wider community, and Fonterra posting its the first ever loss this year has also kept Fergusson busy.
“The year 2018 has been a tough one for the co-operative,” Fergusson says.
“Farmers have had a tough time with M. bovis, environmental and water quality issues.”
Last week, the deluge of burning criticism aimed at the industry continued unabated through reports that an antibiotic-resistant E. coli strain had been found in three Canterbury rivers, including the Rangitata.
Blame was laid squarely at the feet of the dairy industry. An increasing number of dairy cows were accused of releasing 250,000 tonne of untreated sewage into the environment every day thus creating a “major health hazard”.
While accepting some blame for mistakes made in the past, Fergusson believes the dairy industry has been given a bad rap.
“Cows do not wee and poo directly into the water ways,” Fergusson said.
“They do their business in the paddock on the grass.
“Farmers have also invested heavily in effluent treatment in recent years.”
The accusation that the dairy industry kept too many cows was not true, he said.
“We are not interested in producing large numbers for the sake of it. We’re interested in creating sustainable value.”
Water quality played a critical part of the Fonterra set up, he said. And there were programmes in place, such as Tiaki and 50 Catchments, to ensure farmers took measures to improve water quality.
“Farmers have already spent over $1billion on environmental improvements. We’re continuing to work with local communities and councils to deliver water quality improvement at a catchment-wide scale,” Fergusson said.
Fonterra had 99.6 per cent of farmers’ significant waterways fenced and farmers were making considerable riparian planting efforts, he said.
The co-operative’s Tiaki programme, which involves sustainable dairy advisors providing support, tools and services to farmers, has helped it reach its fiscal year (FY18) target of 1000 individually tailored farm environment plans, he said.
“We support regional councils and communities in determining the environmental limits for their region, and we expect farmers to comply with regional requirements.”
Fonterra’s partnership with the Department of Conservation, called Living Water, focuses on finding solutions to enable farming, freshwater and healthy ecosystems to thrive side-by-side, Fergusson said.
“We’re half way through the 10 year partnership and we are working on five Living Water catchments around the country (two in the South Island, Lake Ellesmere and Waituna Lagoon).”
Fergusson said through its 50 Catchments initiative, Fonterra had committed to help restore 50 catchments by working with community stakeholders.
“We’ve identified 50 catchments – 28 in the North Island and 22 in the South Island. Action plans are now being created for each catchment, and engagement with local communities is a key part of this work.”
Dairy had a huge flow on effect in South Canterbury’s communities by providing employment, and both direct and indirect business opportunities to local communities, he said.
“While we don’t have exact figures, the impact will be significant.”
Fergusson said despite growth in the industry now slowing after years of flourishing, dairy still represented an attractive proposition for investors.
“There are significant benefits to dairy farming,” he said.
“It has a high certainty income. Its products are in incredible demand both domestically and internationally.”
Fergusson warned prospective co-operative members though that sustainability was key. Land that was not part of an irrigation scheme will also not be considered, he said.
He said Fonterra felt it had disappointed its farmers in the past year by not meeting its commitments and posting a $196m loss in the last fiscal year.
“We have let down our farmers. More can be achieved for them and we need to be more transparent,” Fergusson said.
“But there are plans in place and we will improve our performance.”
The improvements, he said, were already being implemented with new changes such as a new chief executive being elected.
At November’s annual financial results announcement Fonterra’s new chief executive Miles Hurrell declared a three-part plan to improve performance. This includes taking stock of business, getting the basics right and ensuring more realistic forecasts for the company.
“Our priority is to see farmers’ futures protected,” Fergusson said.
“Fonterra is set up to pay farmers a milk cheque.”