Fonterra 'disappointed' as Colin Armer resigns from its board with immediate effect citing no reason for departure

Fonterra 'disappointed' as Colin Armer resigns from its board with immediate effect citing no reason for departure

Fonterra 'disappointed' as Colin Armer resigns from its board with immediate effect citing no reason for departure

Colin Armer has resigned from Fonterra's board just days after fellow director John Wilson was named as the dairy co-operative's new chairman to succeed Henry van der Heyden.

A brief statement released on behalf of Armer by a PR company said he had tendered his resignation today, effective immediately.

“For many years I have been, and continue to be, a strong supporter of the New Zealand dairy industry and an advocate for Fonterra’s important work. I will continue to be,“ Armer said.

Armer thanked shareholders who've supported him in the past and said he would continue supporting the co-operative model in the future. He had "nothing but praise" for Fonterra's CEO Theo Spierings and the management team, however the statement said Armer wouldn't be available for further comment.

In a brief statement released by Fonterra, van der Heyden said Armer had made a significant contribution to Fonterra's progress as a director for six years.

"While we are disappointed that Colin has chosen to resign we respect his decision. Director elections will be conducted in the normal course preceding the Annual Meeting later this year, at which time farmer shareholders will have an opportunity to elect a new director to fill this vacancy," van der Heyden said.

Last week Fonterra said Wilson will replace van der Heyden as chairman in December. Armer had been considered a candidate to become chairman. 

Armer and his wife Dale are major dairy farm owners, with their interests including a majority stake in Fonterra's biggest supplier Dairy Holdings. Another Armer company, Armer Farms (NI), pleaded guilty in the Tauranga District Court in May to a charge of unlawful discharge of dairy effluent at a Maketu farm in October 2010.

Armer was elected to Fonterra's board in 2006 and the co-operative's website says he's chairman of its Supplier Relations Committee, International Farming Ventures Group, and Payments Working Group, as well as being on the Audit Finance and Risk Committee, Appointments Remuneration and Development Committee and the External Relations Committee.

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Henry van der Heyden must resign! There has been talk since the announcement of John Wilson as chair elect, that the Fonterra Board is not a happy family.  It was odd that the announcement was made when Wilson was out of the country so couldn't front up to media straight away.
What we have operating as the governance of our largest dairy co-op is nothing short of farcical and it has been for a wee while now.  Two Shareholder Council Chairs and one deputy resign before their term, the Board Chair forced to stand down as chairman, two directors (Gent  & Armer) resigning (word is due to the dysfunctionality of the current Board).
Word in the traps is that Wilson may not get re-elected such is the feeling among some shareholders.  Interesting times.

Wilson was in charge of the highly disliked capacity adjustment and TAF. Both contentious issues, not least because of their complexity - I sometimes wonder whether he understood them himself.
But hey! he's a Henry supporter and chief bag boy. All that brown nosing must be rewarded...
Pity Colin resigned, a huge loss for the co-operative supporters, but I can understand his decision. He's just fought hard against some pretty blatant corporate bullying and blackmail to retain control of Dairy Holdings, all the while being accused by some of not paying enough attention to his Fonterra duties while he's doing this.
Seemed to me the stand he took against the receivers and their attempts to sell Dairy Holdings offshore made him a more worthy Chair than anyone else on the Board.

Your ignorance of coporate governance CO impresses me. And your ability to read scandal into pretty innocent happenings (Directors spend a lot of time out of country as that is where the bulk of business is conducted) again continues to impress.
Hey perhaps you should stand in Colin's place and the world will be a better place. Thoughts?

So ITYS you are privy to the details in the affidavit regarding Henry????

What about cooperative governance? That's right ITYS it's no longer relevant. Henry has corporatised Fonterra and dragged a significant proportion of shareholders along with him, bless their short sight self serving outlook. Henry thinks he has 2 out of every 3 suppliers on his side based on the overwhelming 66% mandate on the recent TAF vote debacle. However you and I know this is classic Fonterra spin as it was based on milk solids, and in reality the TAF vote would be 50:50 based on membership as most true and successful cooperatives are. 50:50 hardly a unified cooperative!
It will be interesting to see this good corporate governace in action in regard to the inevitable tension between farmer shareholders and owners of economic rights. Whose side do you think the corporate governance of Fonterra is going to take ITYS?
Wonder if Henry has another lackey that he can usher into the board room through the CAP process? Better start lobbying the significant suppliers...again, although by the sounds of it, you can count Colin out.

I was wondering where you'd got to Omnologo   .....take a bow...good for you .

Will do, thanks Christov

Frankly can't be bothered relitigating the whole TAF debate again. I seem to be a lone ranger in support of it and recognise when the baying masses will move to mob mentality... I hadn't realised that has become the last bastion of the 'nay' brigade. If you don't like contra points of view, deal with it. The reason for change to the capital structure, in my opinion, outweigh the negatives. What consitently is forgotten is that this move could be reversed in the future.
"Don’t argue with idiots. They drag you down to their level and beat you with experience" - Greg King

ITYS give our regards to Tonto......hi ho Silver awAAAAAAAAAAAAAAAAAAY..!

ITYS: What consitently is forgotten is that this move could be reversed in the future. The reality of that happening is as likely as Tonto turning up at my place for breakfast tomorrow morning. :-)
TAF is going to be implemented - that we all know and need to accept - but that doesn't mean that we have to like it.  To me the biggest problem for Fonterra at the moment is the level of distrust of Henry van der Heyden among the shareholder base. Directors I have spoken to acknowledge that this is a problem.  The sooner Henry announces his retirement date, which I hear was supposed to be in October, the better for all. That he didn't say anything when John Wilson's appointment was announced has some wondering if he is looking for an out for the deal he did re the affidavit, especially as he says he will hand over to John in December. If he announces the date it will put paid to a lot of speculation and the Board and the company will be able to truly move on.

Casual Observer.......Henry van der Heyden must resign!
I'm goin to take this print it and frame it......
Corporatise it........shift the power..... you know the rest....!
Good on you by the way.

Lion Corp in Australia has just reduced its payout for tier 2 (not town supply) milk to 15c per L which suppliers are saying will effectively halve their returns. Fontera has always inflated its payout (and borrowed to do so) Prof Robb has pointed this out ad nauseam- wonder if these ructions at F HQ have anything to do with a day of reckoning?

I dared suggest to Mr Wilson when he was a young fulla, that he was perched on the coat tails of his dad. To which a foofoo valve was blown.
Ok, I just have to let it go, (yes I hear you say, let it go Belle)....... I sympathise with Col tho.
Do leopards change their spots. Difficult then difficult now?

Obviously he has found a chink in their armour.

Ok guys some help please, Im confused as to why the Fonterra payout forecast for the 2012/13 season is so low at $5.50. Fonterras balance sheet has never been better for a long while, yet the season advance rates are pathetic. Would seem to me that the country is about to see I would estimate about 50% of farms unable to meet their financial commitments with this payout.

because its a friggin giant Ponzi scheme run by a couple of meglomaniacs.  When Norgate left it had hardly any debt and now its loaded to the gunnels with what? Colin Riden I think estimated 8-9 billion. It made record payments by borrowing, inflating its share value, created artifical not market driven incentives to convert and what a giant cock up thats turned out to be. 
I want to know why?

You think it's loaded with debt now Aj, wait till some of the current directors get going.  Taking debt levels up from 39% to 60% post-taf is what some of them want to do.

Hollow it out and retire with the proceeds - that's a bell that just won't stop ringing in New Zealand.

Norgate may have left Fonterra with no debt but ask the shareholders of the NZX listed NZS how he performed.
They may have a different opinion.

Re: 'their financial commitments'
Does that infer they are spending money they don't actually have?

That infers that the banks must be bricking it as farmers cant meet their mortgage repayments and are asking for overdraft extentions to get through this season. I dont think main stream media has gotten a grasp of this yet.
If I am right and 50% will be struggling, how many will go too the wall!
What do you think this will do, if anything to the $NZ.
And considering Fonterra should be able to payout more to farmers why arent they, this is surposed to be a co-operative, surely!!
And whats with Fonterra selling high volumes of product at low prices at the moment FFS!!

Spoke to friend who's a Westland supplier.  Said that it's not just a good season they need but also an improved payout.
In some ways TAF will make it harder for banks to do their usual to Fonterra cash strapped suppliers - 'sell your shares and supply a corporate'.  What price do you sell the shares at if the price tanks? This has, in the past, given the banks a 'get out of jail' card as farms haven't had to be put on the block.  But that may change under taf?

Could it be that Fonterra is padding its balamce sheet for TAF?
If this is true Farmers will be furious that this is done at there expense, especially from a Co-Operative.
Does it not seem strange to others that Fonterras Fair Value Shares have remained unchanged at $4.52 for the last four years, while the balance sheet has improved?

Is it really that dire NV?   As you say, the MSM certainly don't paint it that way.
New Ford Falcon cars and holiday homes for the kids , is what I hear about around this district.
Farmers have a lot of land banked up.  Around here, they sell off a few acres every year, more than enough to fund the 3 monthly trip to the Gold Coast,  ...and who can blame them.

Moa man, I believe the majority of farmers are doing 'ok thank you very much'. :-)  Some will have been able to put away quite a bit of surplus from the last couple of years.  The tipping point could be if a significant minority say 40% hit the wall financially.  Spoke to a chap recently that said the majority of farmers he works with need $6+ to break even.
Have friends that funded their lifestyle by selling off a few acres every year.  They are no longer farming and both now work fulltime for others in order to pay their bills.  Some will sell off a bit and invest wisely, others don't.

NV, when you have time look through some of the posts we have placed, via the Profile>track function, also catch up with as well.

Thanks will do. Another question for those who might know.
With America starting its next round of Quantatative easing, this must make the $US less valuable. If this is the case does it make the $US price we are receiving for our tonne of SMP even worse?

Don Frazer from Frazer Farm Finance has been on the radio in the last couple of weeks commenting that the banks are back in mean mode. Recieverships have increased and Don himself is very busy with calls from strapped farmers getting hassled by their bank. He also made the comment that some are being forced to sell cows....kinda crazy.

It's just the beginning Belle.  Selling cows - I wondered what they would do seeing forced selling of shares might not be an option.  The last thing the banks will want is to have to put 30+% of farms on the block. Oh, imagine the fallout in the economy if that happened!

What the hell happened CO, only a few short years ago a payout with a 5 in front of it was riches for all. Now it is a disaster. This US drought has got to ease a few minds here in NZ. Although an el nino arriving for us wont bode well for many.

It kinda reminds me of the bull farmers screaming blue murder a month or two back. We got a helluva good schedule from about september to january then the works pulled back. But hell, we were still getting 1200 or thereabouts for 20 month boys. Thats good money. Govt want too much...... rates, ruc, regos and taxes, acc,consents, its endless now. 

Belle, It's called inflation - which all the economic alchemists here will tell you is not happening! Recent dairy conversions (and there are a lot of them) I fear are an endangered species.
Regards, Ergophobia

How that will affect Fonterra's farm gate payout is unclear, with ANZ noting in a report that speculation has been building of a downward revision to the forecast of $$5.50 per kilogram of milk solid.
The GDT-TWI Price Index rose 3.5 per cent compared with the last sale two weeks ago, when prices eased 0.9 per cent. The average winning price at last night's sale was US$2797 (NZ$ 3460) per metric tonne.
Speculation has been building recently that New Zealand dairy prices were due to stage a recovery this year as a persistent drought in the US increased soy and grain prices, which are used as feed by dairy farmers on the west coast of the States.
How that will affect Fonterra's farm gate payout is unclear, with ANZ noting in a report that speculation has been building of a downward revision to the forecast of $$5.50 per kilogram of milk solid.
If the payout is cut it's likely to put pressure on the recovery in the rural economy, with farmers still struggling to get their balance sheets in the black after heavy lending in the run up to the Global Financial Crisis.

Taken from National bank Agri Focus.
Our estimates suggest around 22 percent of
dairy farmers could have liquidity issues over
the next six to eight months.
This would be nearly
double the average from the past
fi ve years. So
expect to see deleveraging take a back seat over this
Elsewhere, most indicators are pointing toward a
positive start to NZ’s 2012-13 milk supply,
but some
recoil from last year’s record 11.4 percent
production increase can be expected.
On the
demand side
China continues to import more
dairy products,
just a different mix to the last
two years. The volume of dairy products imported
by China in the
fi rst six months of this year was 16
percent higher than the same period in 2012. NZ
supplied 56 percent of China’s dairy imports during
this period. While we concur with Fonterra’s initial
2012-13 forecast of $5.50 per MS,
market prices and currency indicate a milk price
closer to $5.10 per MS.
This indicates there is still
some way to go and farmers should be budgeting
conservatively and monitoring cash
fl ow.

Ergo, yes some of it is inflation. However this government promised a reduction in cost of business. I dont see this happening yet. Hopefully it will. I have work to do on my house, but with all the talk of ridiculous council costs I am holding off in the hope something will change.
If it doesnt I will just go ahead without council approval. Bugger them. With what I believe our future holds I doubt councils are going to be able to continue to rort the community, for there will be little left to be rorted. 
Yes Henry those big dairy boys have got a tiger by the tail. I just wonder whether Armers decision to bail Fonterra is along these lines.

  Im getting more concerned  about declining real wages in the west. This is going to impact on consumption and could be deadly for some in the export business. Inflation over here in what you have to buy is way up, wages are stagnating so you get to spend less. My costs in NZ are still going up, the Regional council came up with some new charges that resulted in a %15 increase in  fees.  Its not only farmers who are feeling the pinch its a huge number of people across a broad swath of the west, including those living on investment income.

I gather you are talking about the US Andrew, what is your view on the drought and its effects?

Belle , Im living in town for the first time in my life. I talk to locals they tell me the drought is patchy. Big fire somewhere north of us, I think  Interstate 5 is closed so its dry but as its over 40deg C today its not surprising, lucky they dont get a good Nor-wester or the whole place would be gone in a flash.
 I read daily but so much money being speculated on ag commodities makes it a casino, who to believe- Poker face?
New Zealand, the home of the globalDairyTrade auctions, saw exports of whole milk powder soar 42% last month, taking exports for the first half of 2012 2.6% above those for the January-to-June period last year.
Increased exports to the United Arab Emirates and Venezuela have made up for a 4% drop in shipments to China.New Zealand, the home of the globalDairyTrade auctions, saw exports of whole milk powder soar 42% last month, taking exports for the first half of 2012 2.6% above those for the January-to-June period last year.
Increased exports to the United Arab Emirates and Venezuela have made up for a 4% drop in shipments to China.

Henry, I flogged this of a poster in the Telegraph, dont know where he got the info, linked to this article
To throw into the mix we have the US Department of Agriculture warning every American to be prepared to pay 3-4% more for groceries in 2013.
Beef prices will be hit the hardest, as they are expected to rise 4%-5%, followed by dairy product prices which could climb 3.5% -4.5%. Poultry and egg prices in 2013 are projected 
to go up 3%-4% and pork prices 2.5% to 3.5%, the agency said.
The drought I understand now covers around 60% of the 
continental United States, the largest area since the catastrophic droughts of the 1930s and 1950s.
"In 2013 as a result of this drought we are looking at above-normal food price inflation," U.S. Department of 
Agriculture (USDA) economist Richard Volpe told the Associated Press. "Consumers are certainly going to feel it."

 Russia going dry too in their grain growing regions. Read that somewhere this morning but cannot remember where.

Found this on the heat in Texas for yopu Belle

June 1st:
Just moved to Texas!
Now this is a state that knows how to live!!
Beautiful sunny days and warm balmy evenings.
What a place!
It is beautiful.
I've finally found my home.
I love it here. 
June 14th:
Really heating up.
Got to 100 degrees today. Not a problem.
Live in an air-conditioned home, drive an air- conditioned car.
What a pleasure to see the sun everyday like this.
I'm turning into a sun worshipper. 

June 30th:
Had the backyard landscaped with western plants today.
Lots of cactus and rocks.
What a breeze to maintain.
No more mowing the lawn for me.
Another scorcher today, but I love it here. 

July 10th:
The temperature hasn't been below 100 all week.
How do people get used to this kind of heat?
At least it's kind of windy though. But getting used to the heat is taking longer than I expected. 

July 15th:
Fell asleep by the community pool.
Got 3rd degree burns over 60% of my body.
Missed 3 days of work.
What a dumb thing to do.
I learned my lesson though.
Got to respect the ol' sun in a climate like this. 

July 20th:
I missed my cat, Lomita , sneaking into the car when I left this morning.
By the time I got to the hot car at noon, Lomita had died and swollen up to the size of a shopping bag, then popped like a water balloon.
The car now smells like Kibbles and Shits.
I learned my lesson though.
No more pets in this heat.
Good ol' Mr. Sun strikes again.. 

July 25th:
The wind sucks.
It feels like a giant freaking blow dryer!!
And it's hot as hell.
The home air-conditioner is on the fritz and the AC repairman charged $200 just to drive by and tell me he needed to order parts. 

July 30th:
Been sleeping outside on the patio for 3 nights now.
$225,000 house and I can't even go inside.
Lomita is the lucky one.
Why did I ever come here? 

August 1st:
It's 105 degrees.
Finally got the air-conditioner fixed today.
It cost $500 and gets the temperature down to 85.
I hate this stupid state. 

August 3rd:
If another wise guy cracks, 'Hot enough for you today?'
I'm going to strangle him...Damn heat.
By the time I get to work, the radiator is boiling over, my clothes are soaking wet, and I smell like baked cat!! 

August 5th:
Tried to run some errands after work. Wore shorts,
When I sat on the seats in the car, I thought my butt was on fire.
My skin melted to the seat.
I lost 2 layers of flesh and all the hair on the back of my legs and butt.
Now my car smells like burnt hair, fried butt and baked cat. 

Aug 6th:
The weather report might as well be a damn recording.
Hot and sunny...Hot and sunny...Hot and sunny...
And the weatherman says it might really warm up next week.
Doesn't it ever rain in this damn state?
Water rationing has been on the last six weeks.
My $1,700 worth of cactus might just dry up and blow over.
Even the cactus can't live in this damn heat. 

August 8th:
Welcome to HELL!
Temperature got to 110 today. Cactus are dead.
Forgot to crack the window and blew the damn windshield out of the car.
The installer came to fix it and guess what he asked me???
"Hot enough for you today?" 

August 10th
My sister had to spend $1,500 to bail me out of jail.
Freaking Texas... 
What kind of a sick demented idiot would want to live here??
Will write later to let you know how the trial goes... 

Author Unknown ~

That's a beaut AJ, I'm in Ireland at present in the last 30 days, 27 days rain and it's mid summer. Heading back to Southern France for some sun next month.
Go the Chiefs

That is hilarious.  My sister was born in San Antonio in August.  Dad was stationed at the Air Force Base there during the Korean War - a cryptographer .. one of their best. 
Mom hated the heat and wasn't particularly enamoured with Texans either - and told Dad to put in for a transfer.  Because he was an enlisted man they had to offer him one - but didn't want to lose him .. so thought .. we'll teach the wife and offered him a transfer to Anchorage, Alaska. 
The joke was, unbeknowst to them, Mom was a Canadian - and needless to say my brother was born in Alaska :-).

I get the drift Andrew. I will moan a little less about the next -6 frost. Always look forward to your posts.

Irish dairy farmer I'm staying with has just had a drop in payout to around 23cents / litre, he said that without the EU subsidies he would pack it in. He milks 30 cows plus has another 30 odd suckler cows. Has a gross income of about €100k but just over half of that is subsidies. Like in NZ the costs are killing him.

The ordinary taxpayers of Ireland may riposte that the cost of keeping him in his subsidised Eurotopia is killing them , too .

The ordinary NZ dairy farmer, may also riposte the cost of the subsidised!!

Good point !

I have had in depth discussions with him about what I see as unsustainable subsidies, human nature being what it is, he will take it as long as they are available. Underneith it all he knows they will be phased out.