Fonterra begging farmers to support TAF
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.