Fonterra begging farmers to support TAF

Destiny at stake: Fonterra CEO Theo Spierings

Fonterra is desperately trying to get farmers on its side to approve its controversial trading among farmers (TAF) scheme.

CEO Theo Spierings says in a statement today that if TAF is not passed, Fonterra will "no longer be in control of its own destiny".

Shareholder farmers nationwide have been meeting to discuss the proposed scheme ahead of a landmark vote on Monday.

Many are concerned TAF will open up the co-operative to non-farmer control.

Those concerns are shared by Fonterra's former shareholders' council chairman Simon Couper, who resigned over the issue last month, saying the safeguards were not in place.

Now, Mr Spierings says if TAF does not go ahead key projects to increase the volume and value of dairy exports would have to be put on hold.

"We will have to come up with a Plan B to resolve redemption risk. That could mean up to two years of talking to the government about new legislation.

"Given we've already spent more than three years developing TAF, this would put us in a five year holding pattern.

Mr Spierings says without TAF the government would require Fonterra to return to a fair value share scheme, instead of a restricted market value, and this would increase the share price.

"Farmers would end up selling those shares at the unrestricted price. This is likely to be much higher than the price they bought them for."

Fonterra would then have to find tens of millions of extra dollars to fund these redemptions, Mr Spierings says.

This follows comments made by Fonterra chairman Sir Henry van der Heyden on Sunday, in which he attempted to clear up "misconceptions" about the scheme from farmers.

He made it clear that TAF was not about raising capital, and that Fonterra would not directly receive any new capital.

A well-placed industry insider who declined to be identified earlier told NBR ONLINE that Fonterra will "stop at nothing" to get TAF passed.  

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So if a farmer does not vote for TAF sells his share back to Fonterra, he will get more than he paid for them. I cannot believe any farmer would see something wrong with that picture. As to Plan B if TAF not approved, a well run business would have Plan B ready to go. SO as Fonterra seems to only have 1 plan TAF, me I vote NO!


This is just another foreigner dressing up a divide and conquer strategy to be beneficial.... the end game for TAF is that the investors want the dividends raised so the milk solids prices paid to farmers will go down, farmers would have sold the shares to pay the enormous debt on the land they farm, so the div income wont be going to the farmers as much .... so the farmers will be farmed...



TAF may not be about capital raising per se, but it is clearly setting a template for future capital raisings via possible dividend sell-downs. The thin edge of the wedge perhaps. It also leads to wonder just how much growth is needed to maximise returns for the existing key stakeholders, the NZ farmer. Big is not always best and it begs the question of who is benefiting the most out of this never-ending desire for growth. Is this beast getting out of control and becoming a self serving pot of gold for its employees. A glance at the number of employees earning more than your average farmer gives a pretty good pointer I reckon.


The leaders of fonterra have only themselves to blame for the kick in the teeth they are about to receive.They have been pushing this crap since 2002 using tactics and methods that Goebells would have been proud of.Redemption risk has been overplayed,information has been held back from shareholders until the last minute ,It is too bloody complex ,and you would need rocks in your head if you believed anything the Hon David Carter ever said again.


TAF gets my vote. The situation is too complex to be judged on the brief report of Theo's address. Furthermore it is incorrect to say another foreigner is trying to divide and rule. He's only been in the job about 8 months. TAF and its predecessor have been on the go for over 5 years. It is only the beneficial rights to the shares that can be purchased by outside investors and at a 5% return less tax is only an average investment. I can't see any downside for farmer shareholders.


TAF = indirect foreign and non farmer control and lesser farmer payouts.

'nough said.


All that is needed is for the Government to remove themselves and their silly/special/privileged regulations from Fonterra and leave Fonterra and its owners on a level regulatory playing field with other corporations.
I do not see why a NZ investor who freely chooses to direct his wit/effort/equity into milk production deserves "silly/special/privileged regulations over and ahead of other NZ investors/producers of say, fishing, timber, widgets or whatever..

Or am I missing something, if so, I think someone should tell me.


The redemption risk was an issue in 2008 following a drought and the GFC (two extreme events hitting at the same time). The share value dropped significantly meaning farmers were encouraged to redeem shares and buy back at lower values the following year. The current approach of allowing dry shares so farmers aren't forced to redeem shares in a drought year and a stable share price significantly reduces redemption risk as well as less incentive to redeem shares. Fonterra is also retaining some of the profits each year to build its capital base. So why not stay with this and forget the final stage of TAF allowing non-farmer ownership of Fonterra? I sense Fonterra has an alternative agenda with this final stage and its just not in the interests of farmers. Vote NO but keep the current approach to mitigate redemption risk for Fonterra!


My bank manager revealed that the fonterra shares are being used as security on loans and so questioned the ability to "trade amungst farmers"! If this is the case then surely a large proportion of farmers will be in the same position?


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