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Farmers must retain 100% control of Fonterra - shareholders

Complete farmer control of Fonterra is non-negotiable, the co-op's shareholder council says.

Fonterra Shareholders Council chairman Simon Couper has responded to concern that trading of Fonterra shares among farmers would lead to a loss of ownership and control of the organisation.

“Farmer ownership and control of our co-operative is essential to our core beliefs,” Mr Couper said.

When the council reviews the structure and implications of trading among farmers (TAF), retaining 100% ownership and control is non-negotiable, he said.

“If there is any real risk that 100% ownership and control is not retained by our co-op, council will not vote to support moving to TAF.”

Mr Couper also sought to address the issues around the role of the custodian, which has been the subject of much discussion.

“Ultimately, the Fonterra board has the obligation and responsibility to prove to the council and shareholders that the controls and protections for 100% farmer ownership and control will be embedded in the proposed structure; this includes the role of the custodian and the fund.”

The council had a comprehensive review process in place to evaluate the proposal, once the board released its final details, Mr Couper said.

“We have retained a lawyer with extensive senior corporate law and government advisory experience who is constantly reviewing and questioning the provisions contained within the structure.

“From the council’s point of view it is 100% farmer ownership and control of the co-operative or nothing - if our review process shows that this most key aspect of TAF is not guaranteed then TAF will not go ahead.”

More by Colin Williscroft

Comments and questions

I concur.

Greed knows no bounds.
Farmers who are raping and piliging our waterways and clean green image are bent on protecting their interests by excluding any would be investors that might vote to force them to apply sustainable methods in protecting the environment that they share with the greater majority of New Zealanders

What nonsense! How can you expect any other shareholder (unless Greenpeace got into the action) would not want to maximize their returns too? Farmers have stuffed up the countryside because they are under regulated. Self regulation has, for the most part, been a failure not just in NZ but around the world. The people of NZ need a real government, not some stooge for the corporates.

Greed knows no bounds.
Farmers who are raping and piliging our waterways and clean green image are bent on protecting their interests by excluding any would be investors that might vote to force them to apply sustainable methods in protecting the environment that they share with the greater majority of New Zealanders

What a lot of emotive garbage!!
Have a think about how many towns there are in NZ that have inadequate effluent systems, where the waste ends up in waterways, rivers or sea - where Joe Bloggs rate payer doesn't want to pay.
Have a think about how many farmers there are in NZ that don't pollute as you suggest or are now where near the polluted waterways

Farming is the backbone of the country's wealth generating activity. Remember, NZ is technically still an agricultural based economy.

The next time you pour your milk or dig into a juicy steak, think where the food comes from, you ignorant fcuk. I have no respect for those who disses on farmers. Farmers typically wake up at 4 to 5am to work the land.

If the dairy/milk price is good, the farmers should be rewarded.

go back to the green party from where you crawl out from you wnaker.

Farmers are totally thick

If they allowed say 30% to be floated on the NZX and thsoe funds were invested in more acquisitions overseas they would double th evalue of the company

Make it that the farmer shares are held in one ownership entity that has control of at least 70% of the company and these shares are only allowed to be traded amongst fellow farmer shareholders.

It's not hard to leverage such a great comapny and still protect their control.

It would appear that Farmers are going to continue to hold back Fonterra from becoming a great business entity. If as an example Fonterra had been a listed company with access to capital it could easily have rasied the debt and equity to now have brought Cadbury, instead of Kraft buying it. I see that Cadbury has provided a near 20% return to Kraft in the last twelve months. The combined entity would have been comparable (although still slightly smaller) to world food giants such as Kraft and Nestle. The shareholders council make Blue Kenendy and the other trade unionists of the 70's and 80's look progressive. Such a shame for NZ Inc and for the farming community, that the farmers of NZ are turning from being effectively the backbone of the NZ economy to the handbrake of the NZ economy.

You forget one thing blended. Farmers own Fonterra,and don't trust slippery fat cat city wide boys. Look what they did to Alan Hubbard. If you want a slice of the action buy a dairy farm.

Yep - and those same farmers expect the rest of the country to trust them. Bruno lots of ways around this - issue non voting shares - although i would have to say that the quality of Fonterra Directors and their decision making doesnt inspire confidence not to replace underperformance. Re Alan Hubbard - I suspect we can agree on this - a gentlemen, stuffed by faceless civil servants and an average lawyer currently in politics. In my own dealings with him he was a huge supporter for South Cant and its businesses and backed people. A huge loss for NZ.

There is no doubt that the great majority of dairy farmers in NZ are the best in the world. But, could someone please tell me why they get privileged legislation (2001 DIRA) and deer farmers, fishermen, truck operators et al do not?
Please, anyone? even an answer from one of our legislators would be better than the continual silence on this question!!

Unfortunately NZ will never reach its economic potential whilst Farmers monoplise for themselves the ownership of NZs largest industry. As previous commentators noted the farmers payout can be protected whilst permitting investment from non farmer NZ sharehoders and create another Kraft or Nestle making all of NZ richer rather than the slow sell down of the asset to foreign ownership

Dairyfarm ownership is open to all Kiwis ,and anyone else that can sneak past the OIC. Dairy farmers created and built Fonterra to where it is today,with I accept a wee bit of Govt. help along the way.The Kerry [Ireland ] model scares the pants off most dairy farmers,and I can see no reason for dairy farmers to give away any of their control of Fonterra.

Thanks Bruno, you're the only bugger that has come close too answering my question. G' onya
Dairy farmers should be concerned. 1) Are the people who own the equity in Fonterra, the drivers of Fonterra? I don't think so. Because Directors and management know, when push comes to shove, they have the dairy farmers by the short and curlies.
2) I see a tendency of Gov. to move away from the "owner operator" to "corporate farming" The reluctance to see the "crafar farms to be simply broken up and sold and Gov's love of Landcorp tell me this.
What then for the future Dairy farmers? Tenants? Managers? to Corporate owners?
Thanks Bruno, you kick the Gov. out of your business, you don't need them, the cost will be enormous if you don't. G'luck.

While raising equity by selling a shareholding is potentially a faster way to growth, whats the rush?

Slower organic growth is a much safer way. It doesnt expose you to the market speculators, who manipulate prices and lure you into more borrowing.

Notwithstanding this, I would encourage Fonterra to concentrate investment on value added products, rather than capacity that is poluting the waterways at the expense of all. This is before our commodities get swamped by growing capacity elsewhere.