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Chris Ford: Fonterra crisis: need for greater regulation and accountability!

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Chris Ford
Chris Ford

 It's time for Fonterra to be broken up!

Clearly, this week's tainted milk powder scandal shows that the Fonterra is too big for its boots. Too obsessed with earning big profits for its farmer shareholders. More interested in paying its management and directors big bucks to do damage both to human health and the environment. 

Having said that, Government shouldn't be left completely off the hook either. In this sense, that's why government should move, and move quickly, to further tighten up food safety regulations and, especially, the food inspection regime. In that regard, I believe that Fonterra has simply been the latest example of four decades of excessive deregulation and government cost cutting. I hear you say what has government deregulation and cost cutting got to do with the scandal at a private company like Fonterra? Well, the Nats have cut back on staff and funding at the Food Safety Authority and, even before this current government's time in office, food and quality control inspectors began gradually disappearing from the former Ministry of Agriculture and Fisheries (now Primary Industries) and Crown Research Institutes. All in the name of saving money! After all, deregulation has a lot to answer for when it comes to the growing list of disasters on many fronts as deregulation produced Pike River and leaky buildings to name but a few . Consequently, private companies have spent more time thinking about how they can cut corners in order to earn profits but now the chickens are coming home to roost.

Undoubtedly, though, Fonterra should shoulder the vast majority of the blame for this crisis. They should be held criminally and civilly liable for any illness or death that results from the contamination crisis. They should be forced to compensate their suppliers and consumers even if this eats into their profits. And if I were the board and management of Fonterra, I'd be not just thinking of resigning but falling on my sword - and without the aid of a financial parachute at all. I wouldn't be surprised though if, in many years time, you and I read about the responsible executives having taken up new corporate jobs elsewhere. 

Further regulation of Fonterra is not the only answer. The company needs to be (like Telecom) broken up into much smaller companies through legislation if necessary. Also, the old New Zealand Dairy Board (or something similar) needs to be re-established to take over the marketing and regulation of dairy production. One of the problems with Fonterra is that it has become almost a virtual monopoly supplier of dairy product, both within New Zealand and on the world stage. Therefore, smaller dairy companies (some of whom are suppliers to Fonterra) have suffered collateral damage due to the scandal. That's why a reformed Dairy Board could assist all dairy companies with their overseas marketing and ensure, especially in times of crisis, that innocent companies don't get tarnished by the misdeeds of the guilty. Re-establishing the Dairy Board would also mean the reinsertion of some form of government oversight of the dairy industry with a view to improving not only product safety and marketing but environmental standards in the dairy industry as well.

In the meantime, the deregulation bent Nats could have to face (as they have done over workplace health and safety post-Pike River) the need to regulate and police food production standards more vigorously. That's why I would welcome National doing even a small ideological volte face on this issue if anything else.



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