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Fonterra Acknowledges Shareholder Council Concerns

For Immediate Release Thursday 1 August 2002

FONTERRA ACKNOWLEDGES SHAREHOLDER COUNCIL CONCERNS

Fonterra has today acknowledged the concerns of the Shareholders' Council surrounding milk collection and remains focused on resolving the issues raised.

"We are taking the issues raised very seriously," said Fonterra Deputy CEO, Chris Moller.

"Fonterra is concerned that its co-operative members receive the highest level of service possible. We are at the beginning of the new season, inevitably there will be some problems.

"As at today, we have registered 337 unresolved complaints, of which 111 are related to milk collection.

"We are taking a number of actions to address the concerns raised around our Contact Centre, the Daily Return Slip and milk collection.

"Clearly this is taking time and farmers are expressing their frustration. We are working as quickly as we can to resolve the issues."

END

Attached: Fonterra Milk Collection Key Issues

Fonterra Milk Collection

Key issues relate to:

1. Scheduling of tankers to collect milk from farmers commencing supply in the new season. One of the merger synergy projects is to centralise scheduling of tankers into a single location using advanced scheduling systems that significantly reduce the distance travelled by tankers. This will generate benefits for farmers but in the interim we acknowledge the establishment problems and where appropriate, we have reverted to manual scheduling techniques.

2. Delays in getting a response from the Contact Centre (Call Centre). Caller demand has exceeded the Contact Centre's capacity. Staff levels and the number of phone lines into the centre have been increased to meet caller demand.

3. The printing of daily dockets delivered from tankers when they pick up milk. New software and tanker scheduling systems have not been able to meet the standards met by the previous systems and modifications are now being made to software to resolve this. In addition, a communications pack explaining the new system to shareholders is under preparation.

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