The steering group for the review of the role and functions of the Fonterra Shareholder Council has made 27 recommendations in its final report, only one of which suggests a change to Fonterra’s constitution.
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The review group claims the changes are comprehensive and should ensure a significant reset, but the headline grabbers number only three.

These are a name change to Fonterra Co-operative Council, no more confidential information to councillors from the board of directors and the management, and an unspecified boost in remuneration for the council chair.

Recommendation four is ceasing communication of strategy and company operations to avoid blurring council’s representation role with the board’s governance role.

The council should stop calling itself the cornerstone shareholder.

“Cease councillors’ access to confidential information to ensure the council can be independently objective in holding the board to account,” recommendation 13 said.

The increase in remuneration for the chair should be to a level that symbolises the importance of representation and ensure the role of chair is not a stepping-stone to election to the board, recommendation 25 said.

The change of name signals that the council is there to represent the interests of members, including sharemilkers and non-shared farmers, as owners, investors, suppliers and members of the co-op.

Most of the remainder are changes in emphasis designed to refocus the council to its core functions of connection, accountability and guardianship.

Communication with members must be strengthened and facilitated by structured engagement including regular surveys and ward meetings to build a comprehensive understanding of members’ interests and needs.

The council should provide the board with a formal, annual letter of members’ expectations.

The board should respond with a statement of strategic intent on how it is addressing these expectations through long-term objectives and strategy.

The council must seek from the board explanation and responsibility for Fonterra’s strategy and performance.

The council should as far as practicably draw on publicly available information and independent performance assessments and feel free to seek outside analysis as required.

The review group said the council should be the guardian of the co-operative philosophy, refresh the Understanding Your Co-operative Programme, but hand over the MyConnect conference.

The present council has already approved of the recommendations and believes changes can be implemented within the constitution and should be progressed quickly.

However, an overall change in wording in the constitution was recommended.

“Ultimately, the council should seek shareholder approval for a change to clause 16 of the constitution, to establish a role description and embed changes to the functions and operating framework recommended,” they said.

The year-long review process included repeated consultation with farmer-shareholders and their current councillors.

“The concerns, insights and expectations we heard have very much shaped our final report,” steering group chair James Buwalda said.

“(They) overwhelmingly want a strong and capable council to effectively represent their interests, but also need to see significant change in the way the council operates in order to meet their expectations.”

Highway closures force Okanagan dairy farmers to dump milk as it can’t get to Coast for processing.

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