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Keywords:

  • dairy spaces;
  • dairy supply chain emergence;
  • Fonterra;
  • globalising dairying;
  • knowledge space;
  • sustainability

Abstract

  1. Top of page
  2. Abstract
  3. A space of engagement
  4. Setting the scene
  5. Local prominence, global reach
  6. Geographic framings
  7. National development lens (milk and ingredients)
  8. Globalising world lens (adding value and adding values)
  9. Engaging and working with and in the world, going forward
  10. Acknowledgements
  11. References

New Zealanders have little collective vision of their position and future in a globalising world. Recent developments in New Zealand's primary sector show potential pathways to the future. We explore two claims: thinking about New Zealand is to think about the emergence of Fonterra Co-operative Group in New Zealand's globalising economy. Thinking about Fonterra is to think about New Zealand and the implications that spring from globalising activities. Fonterra is a lens to understand better the possibilities and development options and the challenges that are arising as New Zealand forges its place in a globalising world.

This paper discusses an experiment in geographical knowledge production, combining the experience and skills of a dairy industry executive who graduated in geography with that of an academic geographer with factory operator experience in the dairy industry. The project created a joint knowledge space in which ideas from geography and industry were assembled into a geographically informed argument, and then performed by us as a keynote presentation at the New Zealand Geographical Society's 2008 (NZGS2008) biennial conference. The subject is the evolution of New Zealand's dairy industry as it responds to the globalising of both its markets and industry players, and in particular of Fonterra Co-operative Group Ltd's emerging role and impact as the leading corporate in the globalising dairy trade world and its prominence in New Zealand's wider globalising economy as New Zealand's largest company by far. We begin with two propositions: thinking about New Zealand is to think about Fonterra; thinking about Fonterra is to think about New Zealand. Our concern is that Fonterra has a public persona within New Zealand that suggests the company and its wider issues and dynamics are often poorly understood and misrepresented. These issues in many ways are but a reflection of the wider challenge facing New Zealand in understanding and building its position in the world. Fonterra is a lens through which we can understand better the possibilities and development options, and the undoubted challenges that are arising as New Zealand forges its place in a globalising world.

Our paper has two interwoven strands: a commentary on how we thought and brought our argument into existence, and an evidence-based discussion relating to dimensions of wider dairy industry emergence, and the changing relationships and interactions that form Fonterra and its New Zealand and global dairy scene. Readers need to be conscious of these strands, which are very deliberately made explicit. Acknowledging these strands allows us to move among four interconnected aspects: representations of the dairy world that we provide, pointers that highlight practice-based economic and governance decision making by key actors, the conditioning work or influence that occurs because of the way we frame our knowledge statements and the possibilities and potential of the co-production of knowledge. We begin by briefly discussing the steps that led us to see ourselves as engaging in a joint knowledge space. This initial discussion considers how we came to recognise the different understandings and capacities we brought to framing our subject, the key decisions we made about what to include in the keynote, the form of presentation of the keynote and the tensions this all posed for the eventual paper.

A space of engagement

  1. Top of page
  2. Abstract
  3. A space of engagement
  4. Setting the scene
  5. Local prominence, global reach
  6. Geographic framings
  7. National development lens (milk and ingredients)
  8. Globalising world lens (adding value and adding values)
  9. Engaging and working with and in the world, going forward
  10. Acknowledgements
  11. References

We are both geographers who professionally inhabit different, but potentially intersecting knowledge spaces. For Stuart, this has meant a 20+-year career operating globally as an executive in the dairy industry and with an interest in how the discipline of geography might assist in explaining the organisational and industry dynamics within which he works. Richard also operates globally, as an academic with a keen interest in the political economy of new economic spaces, and in following the rise of Fonterra as a transnational entity, and its economic and institutional strategies.

Both of us are members of an informal Auckland-based Globalising Dairy Research group, which has been exploring Fonterra's emergence (Gray et al. 2007; Stringer et al. 2008; Stringer et al. submitted; Tamasy et al. in press). The group, consisting of geographers in the School of Environment and in International Business at The University of Auckland and in Fonterra, has sought to use maps and diagrams to help narrate the globalising dairy industry, grappled with the inescapable political and normative/moral dimensions of agri-food developments and refused to be confined by the conventional norms and questions of academic and industry knowledge systems (Jackson et al. 2009; Le Heron 2009a). The research has reinforced for us the unique advantages of New Zealand as a location in which to make substantive contributions to international geographical research and scholarship. New Zealand's position as relatively peripheral in the world economy gives it great value in providing a test and measuring for broader claims about firm behaviour and location. The relatively intimate human scale of a country of four million people encourages cross fertilisation between the academy and industry. This is exemplified by the global headquarters of Fonterra being just a short 3-min walk from The University of Auckland's School of Environment. This has immeasurably helped face to face interactions.

The keynote address presented special challenges. A range of decisions had to be made as we sought to offer different perspectives and conceptualisations which needed to be melded together. Foremost, deciding to talk about the ‘elephant in the room’ in New Zealand development, that is, to confront and consider explicitly Fonterra as a developing organisation in addition to dairying, positioned us somewhat differently to many other commentators. We saw this as a landscaping exercise, which, as we explored it, required full attention to not only the more conventional and well-known New Zealand public views of Fonterra, but also demanded that we consider Fonterra's own internal understandings of itself, and its many dynamics and its multiple roles in New Zealand and elsewhere. We realised too that we had embarked on a distinctive collaboration, involving co-learning and co-production of knowledge (Cook et al. 2006, 2007; Le Heron et al. 2006). Because of our background, we were ‘thinking’ globalising dairying differently: teasing out understandings from inside and outside of dairy enterprises, different components of the dairy industry, the locations and regions of dairy farming and processing, competing explanations and narratives about how things worked and had evolved to where they were. We probed the changing relationships and interactions both within the wider dairy industry and within Fonterra the organisation. This left us wrestling with the challenges of ‘representing’ what we knew about various dynamics, and ‘presenting’ the basis on which we knew, because this latter aspect was a major key to the new knowledge we were trying to produce. This became even more important when we wished to include in our keynote in-the-making dimensions of new knowledge and knowledge systems that are actively re-shaping Fonterra's trajectories. While these sorts of knowledge production issues are increasingly discussed in the international literature (Jasanof 2004; Le Heron & Lewis 2007, 2009; Lewis 2009; Munro et al. 2009), we felt the synthesis and synergies from our collaboration were substantially different to earlier efforts because we were working the academy–industry nexus in a new manner. These issues took us beyond much contemporary corporate geographic (Coe et al. 2007; Rodrigue & Notteboom 2009) and international business understandings (Buckley 2002; Buckley & Ghauri 2004). This created a problem for us, about how to place the keynote audience into the trajectories of Fonterra and the globalising dairy work in a manner that would meaningfully frame and position for listeners the relevant dynamics and their constitutive actors, and open up the possibility of new thought and engagement.

We concluded that we needed to perform some of our knowledge production strategies into our address. We consciously used four techniques of performance to shape the in-the-room experience (Dewsbury et al. 2002; Law & Urry 2004; Le Heron 2007, 2009b; Thrift 2007; Gibson-Graham 2008). First, we centred the PowerPoint screen and ourselves by putting a New Zealand map on one side and a map of the world on the other. This simply, but effectively, signalled the relational nature of our keynote. As we explained to our audience, we were forging New Zealand and international perspectives, we were part of New Zealand yet elsewhere, we were knowledge producers at an academic conference. Second, we gave equal voice to each other – industry and academic – and ensured each offered critical reflections of the other. This demonstrated the joint thinking behind our conclusions. Third, to bring industry into the narrative and the room, we highlighted Stuart's direct involvement in Fonterra's launch of the globalDairyTrade (gDT) trading website (http://www.globaldairytrade.info/) in the USA on the morning of the keynote. This immediacy demonstrated insider positioning and confirmed the New Zealand–rest of the world relationship that Fonterra implies. Fourth, images of Fonterra from company reports and of newspaper cartoons centred Fonterra's public persona and showed contentious issues in the dairy world. This included basic information about the globalising dairy scene that was often missing from most accounts. This was both up-to-date and more complete as we had a better sense of what statistics would reveal Fonterra as a player and the size of the game in which Fonterra was playing. Our hope with our presentation techniques was to provide a coherent view of the contemporary moment in New Zealand and dairying, as seen through the multiple dimensions of Fonterra.

While the rest of the paper abridges the keynote, it foregrounds some realities that urgently need to be understood by policy makers, academics, the public and the dairy industry. We consider such understanding vital in building frameworks of engagement over issues, challenges and aspirations that many in New Zealand and overseas find hard to comprehend.

Setting the scene

  1. Top of page
  2. Abstract
  3. A space of engagement
  4. Setting the scene
  5. Local prominence, global reach
  6. Geographic framings
  7. National development lens (milk and ingredients)
  8. Globalising world lens (adding value and adding values)
  9. Engaging and working with and in the world, going forward
  10. Acknowledgements
  11. References

On the morning of our keynote address, 3 July 2008, Fonterra conducted the world's first global Internet trading of dairy products. Managed out of Boston by independent contractors, the trading website gDT allows customers around the world to bid once a month on Fonterra whole milk powder contracts across three delivery periods: spot, 3–6 months and 6–9 months. This introduced to the world dairy industry basic risk management tools that are widely used for other commodities like coal, oil, sugar, coffee and even ship charters. That initial event opened at 1:00 am New Zealand time to ensure optimal timing in different time zones; had more than 100 customers registered from Africa, Middle East, Asia and Latin America; and lasted 3 hours. Only Fonterra among the world's top 10 dairy corporates had the global stretch to conduct such an event around the globe. The impact on world buying behaviour has been immediate with gDT seen as a leading market price indicator and with extensive press coverage (Fox 2009a,c). We asked at the keynote address, as geographers, and as New Zealanders, how we should respond to such an event.

What is the commercial mindset within Fonterra that enabled such a global industry game changer as gDT to happen from a New Zealand location? And how does this align with the popular New Zealand-centric view of dairy farming – one of ‘established industry’ and impacting on local river quality with nutrient run-off, and milk tankers slowing the flow of traffic on the roads? Indeed, how does the global reality of Fonterra's markets, and the large and vital foreign exchange earnings generated from them intersect with the often uncomfortable public response to the growth in dairy farming and its impacts on local landscapes? And as Fonterra globalises, and invests in production elsewhere (e.g. Chile, Brazil, Australia), the debate moves beyond New Zealand's borders, with Fonterra now generating economic activity in other countries and with inevitable local impacts ‘over there’– environmental, organisational and cultural, with, for example, inevitable changes in farm production methods and labour employment. New Zealand's links into world circuits of trade, production and finance have frequently altered. Earlier internationalising episodes for New Zealand occurred in the 19th century (e.g. New Zealand Insurance; see Hunter 2007) and as part of the 1980s restructuring (e.g. brewing and forestry). In the 2000s, globalising New Zealand is entwined with a globalising dairy industry. New Zealand has to work through the implications of this: economically, environmentally and socially.

The popular perception and discourse in New Zealand are of Fonterra as a national company, yet inside Fonterra the discourses are international, and have been for some time. This came into stark relief with the 2008 melamine tragedy in China. Within New Zealand, it was Fonterra's response that was the predominant theme in the media, with Fonterra holding 46% of San Lu, one of the numerous impacted Chinese dairy companies. While certainly very important to Fonterra's shareholders, and some hard lessons were learnt by Fonterra, this issue was presented by the New Zealand press as a national issue involving Brand New Zealand (Hembry 2008). Yet, internationally, the media paid virtually no attention to San Lu having a New Zealand company on its share register. There, focus was on the substantive issue of widespread contamination of the dairy supply chain in China, which had led to a public health scandal and the tragic deaths of babies.

Local prominence, global reach

  1. Top of page
  2. Abstract
  3. A space of engagement
  4. Setting the scene
  5. Local prominence, global reach
  6. Geographic framings
  7. National development lens (milk and ingredients)
  8. Globalising world lens (adding value and adding values)
  9. Engaging and working with and in the world, going forward
  10. Acknowledgements
  11. References

New Zealand has a long history as an exporter of dairy products. About 95% of its production is exported around the world. It is the world's ninth largest producer of milk, producing 16.3 billion litres of liquid milk in the 2008 season. New Zealand's annual milk production is larger, for example, than the United Kingdom, Poland, Australia or The Netherlands. The world's largest producers are India, USA and China (International Dairy Federation 2008).

Fonterra is New Zealand's largest company by a large margin with a turnover in 2008 of NZ$17 billion, and alone generating fully one quarter of New Zealand's export earnings in 2008 (New Zealand's next biggest export earning sector, tourism, consists mainly of small companies). It is commonly reported that Fonterra alone makes up 7% of New Zealand's GDP.

Fonterra itself is the world's largest processor of raw milk, processing nearly 20 billion litres of milk, and is the fifth largest dairy company by revenue. This includes 15 billion litres or 93% of New Zealand's milk, and another 4 billion litres offshore from other companies and suppliers. It processes milk on four continents. Approximately 95% of its earnings are generated outside New Zealand by direct sales to more than 100 countries and through a network of international processing and distribution investments. Fonterra is a private company, co-operatively owned by its 10 600 farmer shareholders who supply the milk. Fonterra has 16 000 employees (6000 of these offshore).

Geographic framings

  1. Top of page
  2. Abstract
  3. A space of engagement
  4. Setting the scene
  5. Local prominence, global reach
  6. Geographic framings
  7. National development lens (milk and ingredients)
  8. Globalising world lens (adding value and adding values)
  9. Engaging and working with and in the world, going forward
  10. Acknowledgements
  11. References

At the keynote, we wanted to highlight two mutually constitutive developments: first, both New Zealand and international dairying have evolved dramatically over the past decade, and second, Fonterra is undergoing significant internal transformations in thinking, especially around the centrality of sustainability to its operations and future. In order to highlight these aspects, we drew on the scholarship of international economic geographers, which, since the early 1990s, has sought to show the interdependencies and co-construction of globalising and localising processes (Peck & Yeung 2003; Coe et al. 2007; Dicken 2007), and the potential of place-centred ideas about sustainability (Bowler et al. 2001; Hinchliffe et al. 2007; Lowe & Ward 2007). Dairy developments were discussed using a national development lens and then a globalising world lens. To point to the effects of new knowledge frameworks on action, we include several diagrams to progressively deepen and problematise perspectives on sustainability. The left-hand portion of Figure 1 is a stylised knowledge framework about sustainability that has been developed by the academy external to industry and to key actors. Its special value is that exposes the multidimensionality of sustainability ideas, which serves as a frame of reference when considering the nature of actual sustainability practices. The later diagrams enable us to examine issues and implications of Fonterra's rapidly evolving supply chain thinking in quite different terms.

image

Figure 1. Geographic overview of dimensions of sustainability.

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National development lens (milk and ingredients)

  1. Top of page
  2. Abstract
  3. A space of engagement
  4. Setting the scene
  5. Local prominence, global reach
  6. Geographic framings
  7. National development lens (milk and ingredients)
  8. Globalising world lens (adding value and adding values)
  9. Engaging and working with and in the world, going forward
  10. Acknowledgements
  11. References

Dairy has been a key part of the New Zealand economy since the 1880s, and is responsible for rural economic development and landscape in much of the North Island. The small New Zealand domestic market meant that from the start the industry focused on export of commodities such as butter, cheese and latterly milk powder. Centralised, regulated export marketing through producer marketing boards was the norm from the 1920s. Over the second half of the 20th century, consolidation of smaller dairy cooperatives into larger regional companies and the closure of small processing factories have been a distinctive aspect of rural change in New Zealand. In 2001, the culmination of this was the merger of two large cooperatives (Kiwi Dairies and the New Zealand Dairy Group) with the sole exporter and marketer by law, the New Zealand Dairy Board (NZDB) to create Fonterra. This was accompanied by repeal of sole exporter status inherited from the NZDB, opening the door for any independent New Zealand or international company to engage in export. Along with the economic processes consolidating dairy manufacturing and exporting similar drivers were also transforming behaviours on the farm.

Intensification of dairy farming

The intensification of dairying is one of the dominant themes apparent to the observer of the rural landscape in New Zealand over the last 20 years. Figure 2 identifies several components. Cow productivity has increased 20% in the last 15 years, from 260 to 307 kg milk solids production per cow. There are nearly 4000 fewer herds now than 20 years ago (11 400 vs. 14 800), but the average herd size has more than doubled in that time from 154 cows to 350 cows. A marked movement of dairying into Canterbury and Otago, and back into Southland (an early centre of dairying) has occurred with much larger average herd sizes in the South Island than the national average. With the expansion of the Edendale (Southland) manufacturing site now underway, the world's two largest dairy manufacturing sites are now in the South Island (the other is Clandeboye, in South Canterbury).

image

Figure 2. Dimensions of New Zealand dairy intensification. Source: Livestock Improvement Corporation (2007).

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This investment dynamic is part of a more general, but episodic and conflicted, scaling up of New Zealand's land-based industries in particular regions. Recent episodes have included exotic forestry in the 1960s and 1970s (Le Heron & Roche 1985), sheep/beef on marginal hill country in the 1970s (Le Heron 1989a,b) and apple production in the 1970s and 1980s (Le Heron & Roche 1996). Viticulture for wine (Lewis 2008), and dairying in the 1990s and 2000s are the dominant contemporary dynamics of land use change (Blackett & Le Heron 2008). The changes have resulted in re-imaging of New Zealand's landscape, new identities and behavioural changes.

Intensified dairying is attracting significant public and media attention. Dairying is becoming larger and larger. The water and effluent management requirements of dairying continue to mount. Non-point pollution is a feature of farm environments, local river catchments and river estuaries in dairying areas. These aspects are integral to overseas perceptions about farming and processing, but because of historically limited feedback loops from markets (Campbell 2009; Campbell et al. 2009; Le Heron & Lewis 2009), behaviours that downplayed environmental implications (Jay 2007; Jay & Morad 2007) have only recently been seen as potentially risking New Zealand export markets. Fonterra's response to this has been an ongoing and continuing re-alignment of corporate strategy to increasingly place a vision of sustainability at the heart of the business.

Globalising world lens (adding value and adding values)

  1. Top of page
  2. Abstract
  3. A space of engagement
  4. Setting the scene
  5. Local prominence, global reach
  6. Geographic framings
  7. National development lens (milk and ingredients)
  8. Globalising world lens (adding value and adding values)
  9. Engaging and working with and in the world, going forward
  10. Acknowledgements
  11. References

For much of its history, the New Zealand dairy industry was outwardly focused on the United Kingdom ‘home’ market. The entry of the United Kingdom into the European Economic Community set in motion a market diversification strategy. The 2001 merger of the largest remaining co-operatives and NZDB to form Fonterra enabled the industry to expand and build on the outward international focus as a single large integrated corporate entity focused on international customers and markets.

A globalising network of trade flows

In academic and company presentations around the world, maps revealing Fonterra's trading development from the NZDB era into a global corporate have helped situate Fonterra as a truly global actor (Fig. 3). The emergence exemplified by Figure 3 is built on several foundations: New Zealand remains central to Fonterra both as the key milk supply source, manufacturing base, and it is where its shareholders are located; but some 20% of milk supply is now being sourced from other countries, but New Zealand standards remain the benchmarks with the NZMP brands (Fonterra commodity brand), for example, being printed on 100 million bags, cartons and drums each season; 70% of Fonterra's sales are bulk dairy ingredients, meaning the company is predominantly organised around a business-to-business model. The consumer (retail) brand businesses are organised as stand-alone strategic business units that buy their requirements from the Fonterra core as another customer. Of the top 10 global dairy corporates, Fonterra alone has a major trade and processing presence in four continents. Behind the trade flows shown in Figure 3 lie a series of strategic supply, market channel and innovation partnerships (Gray et al. 2007). The evidence clearly demonstrates much complexity and ambiguity about Fonterra. Is it a national or an international company? Should it use national or corporate branding? How does Fonterra build value-added consumer activities when its main strength is ingredients and scale processing, and ingredients customers may also be consumer competitors? Will Auckland always make best sense as a headquarters location, given that most customers are located internationally?

image

Figure 3. Emergence of Fonterra's trade flows. (Note: Gray et al. 2007, 12–13 for fuller details).

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Globalising the leadership space

Fonterra should not be read-off conventional business models. It is a creation of specific historical conditions with a particular legal structure. Its cooperative status both constrains and offers opportunities on how it operates and how it can seek to grow. Led by Andrew Ferrier, a Canadian, six of the ten members of the Fonterra Leadership Team in 2008 were non-New Zealanders (Fig. 4), compared to two of six at Fonterra's inception. This is a sharp break with the traditional make-up of a farmer co-operative, and more than anything illustrates the outward focused global mindset of Fonterra. Fonterra is a very active shaper of the global dairy scene, at the forefront of global dairy supply chain development, and prominent in phyto-sanitary and sustainability initiatives internationally. By 2015, it is possible that as much as half of its milk will come from sources other than New Zealand. Not surprisingly, the issue of capital structure keeps surfacing (Editorial 2009; Fox 2009b; Gaynor 2009). This is frequently reduced to a binary choice, between a cooperative or corporate model, the former being simplistically projected by some media commentators as an impediment to growth, and the latter equally simplistically being hailed as a vehicle for growth. Such a dichotomy masks many organisational dynamics that would exist under either scenario – issues of performance, returns to shareholders, energy efficiency, resilience of environmental processes, sourcing of milk supply, strength of global customer relationships and innovation.

image

Figure 4. Fonterra's globalising leadership space.

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Global supply chain development

Since its inception, Fonterra has faced major supply chain constraints – it cannot get enough raw milk from New Zealand to meet the demand from large global coporate customers; the distance from New Zealand to markets has costs in energy and time; the seasonality of milk production imposes a need to hold inventory of product; and the complexity of networks and relationships from new supplier sources, customers and regulatory agencies are demanding of resources. Fonterra's presence in the global dairy supply chain is exemplified by the Fonterra–Nestlé relationship. Fonterra is Nestlé's largest dairy ingredient supplier, while Nestlé is Fonterra's largest customer.

Cross-cutting supply chain pressures internationally (Lawrence & Burch 2007; Le Heron 2009a), combined with New Zealand demands, has resulted in a series of initiatives within Fonterra that are gradually altering what is known about the company's whole supply chain, from the farm through processing to final purchase by an end customer. Figure 5 depicts three ‘faces’ of Fonterra's internal learning, and re-assessment of its supply chain characteristics and challenges. A ‘sustainable dairy co-operative’ has to mean more than a company-centred notion of financial sustainability. It includes confronting a number of realities. In New Zealand, Fonterra needs a ‘licence to operate’ that is publicly and politically acceptable. Consumer sentiment in the USA and Europe is increasingly influential; supermarket power along with ‘buy local’ and ‘food miles’ campaigns can impact rapidly on market performance for branded products; the supply chain increasingly involves more than product, for instance, extending to animal welfare and environmental impacts. Food industry customers increasingly demand information about practices claimed to be sustainable.

image

Figure 5. Emergent framings and metrics of sustainability in Fonterra.

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In a multi-pronged approach, Fonterra sought to benchmark its sustainability performance at every level in its global supply chain, beginning with its New Zealand dairy farmers and off-farm operations, including transport, processing and logistics. John Hutchings (2008a,b), Fonterra's general manager of sustainable production, notes that the company has systematically embarked on measuring and benchmarking different dimensions of a wide range of indicators. A major carbon foot printing exercise right through the supply chain is underway. The use of new metrics has been shown by international scholars to have been pivotal in the rise of new industries and economic performance (Barry 2002; Larner & Le Heron 2002; Callon & Law 2005; Busch 2007; Mitchell 2008). The new knowledge systems that are being created are allowing Fonterra to work with different stakeholder groups in its supply chain to make immediate sustainability gains through efficiencies and longer-term gains from changing practices. The Global Dairy Agenda for Action on Climate Change among global dairy corporates, launched in 2009, was in large part spearheaded by Fonterra (http://www.dairy-sustainability-initiative.org).

What do these new understandings mean for how Fonterra engages in its multiple dairy spaces around the world? In 2008, global inventories were almost zero and demand for milk ingredients in food was at an all time high. Prices rose to record highs. But the world food scene is confronted with contrasting drivers (Jackson et al. 2006; Morgan et al. 2006; Lang 2007; Maye et al. 2007). Basic food demand is growing in Asia, Middle East and Latin America as hundreds of millions move out of dire poverty, and a protein shortage is appearing. On the other hand, demand for functional foods, mostly from rich economies, is accompanied by concerns about health, nutrition, obesity and ageing (Dixon 2009). Global corporates involved in dairying are reviewing how to respond strategically. The French multinational Danone Group, the no. 3 global dairy corporate, for example, has switched out of biscuits into water and child nutrition. Fonterra is inevitably part of this process, with its core business being a supplier to food ingredient manufacturers who are asking for greater assurances about food safety, and looking for new ingredients to assist their moves into healthy nutritional products. But, it has also actively sought to grow its own value-added activities. Fonterra estimates that by 2015, potentially up to half of its milk could be sourced outside New Zealand. The company has the stated aspiration of being the ‘world's most sustainable supply chain for dairy’, and a world leader in sustainable and profitable farming systems.

Engaging and working with and in the world, going forward

  1. Top of page
  2. Abstract
  3. A space of engagement
  4. Setting the scene
  5. Local prominence, global reach
  6. Geographic framings
  7. National development lens (milk and ingredients)
  8. Globalising world lens (adding value and adding values)
  9. Engaging and working with and in the world, going forward
  10. Acknowledgements
  11. References

We have argued that Fonterra has come to know its New Zealand dairy space differently because of growing awareness of world environmental, food safety, nutritional, animal welfare and other issues. Because of its particular New Zealand constraints, understandings, issues and challenges, Fonterra is learning how it needs to evolve and develop in different ways. Equally, it is learning about its organisational capabilities and getting to know what it offers as a global operator and how to interact in other dairy spaces. This corporate understanding of the interlinkages and feedback loops between its New Zealand dairy space and its wider global footprint is a major development. This is setting in train a continuous learning in the organisation that is not just about New Zealand or just its global developments, but is about the interdependencies of all the dairy spaces, local and global, within which Fonterra operates.

We identify four main conclusions. These relate to how we co-produced knowledge, insights into how sustainability issues can be framed, documentation about the actual dynamics of Fonterra as it evolves and attempts to configure a sustainable supply chain and the urgency to understanding more about New Zealand's globalising economic activities.

First, in the keynote, we stepped into each other's globalising spaces – industry and academic – to consider what sorts of knowledge might be produced about Fonterra and New Zealand. In doing so, we framed discussion to produce different dairyscapes and foodscapes that are inescapable mixes of global and local influences. The presentation and the paper reveal that without the joint knowledge space we created, certain knowledge could not have been produced by either of us on our own. For the academic, fuller representations of corporate dynamics and global issues as understood by dairy industry practitioners would not have been possible. For the industry manager, the geography, and moral and political economy in which the actions and issues surrounding particular actors can be seen and understood in fresh terms.

Second, the keynote gave content to the NZGS2008 conference theme of sustainability. The second part of Figure 1 shows geography as central, integral and active, whether in the initial holistic academic conception or in the more business-grounded conception. The inescapable reality that is revealed from following a New Zealand corporate as it responds to inshore and offshore demands is that understanding the many dimensions of organisation across and in spaces is fundamental to knowing the world we are now living in.

Third, Fonterra has a vision of being the world's most sustainable (dairy) supply chain, leading the world in terms of sustainable farming systems. Will this be brought to centre-stage? Will Fonterra become a thought leader in the world dairy industry? Will New Zealand as a nation support such aspirations? The basis of authority to engage in dairying and dairy spaces can no longer be assumed. Instead, supply chain aspirations and development are embedded in complex politics, requiring action, assurances and answers on matters as diverse as trade negotiations, genetic engineering, labour rights, local economic impacts, animal welfare, phyto-sanitary protocols, soil health, ecosystem resilience, dietary needs and food safety.

Finally, in thinking about New Zealand as a nation, the primary sector cannot be dismissed as traditional or without merit or insight, or lacking significance to New Zealand's development debate. It is simply too important. Examining the primary sector players is a key way of gaining insight into how New Zealand and New Zealanders are engaging in the globalising world economy. By focusing on Fonterra (as a significant actor), we have shown that New Zealanders are beginning to know themselves in different ways, as differently positioned, with different possibilities open to them.

Acknowledgements

  1. Top of page
  2. Abstract
  3. A space of engagement
  4. Setting the scene
  5. Local prominence, global reach
  6. Geographic framings
  7. National development lens (milk and ingredients)
  8. Globalising world lens (adding value and adding values)
  9. Engaging and working with and in the world, going forward
  10. Acknowledgements
  11. References

We wish to thank Professor Eric Pawson, Managing Editor, New Zealand Geographer, for the invitation to give the 2008 New Zealand Geographer keynote address at the NZGS2008 biennial conference. The viewpoints expressed in the paper do not necessarily reflect those of Fonterra Cooperative Ltd. We are grateful to Igor Drecki, Geographic Unit Manager, School of Environment, The University of Auckland, for the preparation of the figures.

References

  1. Top of page
  2. Abstract
  3. A space of engagement
  4. Setting the scene
  5. Local prominence, global reach
  6. Geographic framings
  7. National development lens (milk and ingredients)
  8. Globalising world lens (adding value and adding values)
  9. Engaging and working with and in the world, going forward
  10. Acknowledgements
  11. References
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