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Fonterra remains committed to restricting its unit fund under trading among farmers (TAF), despite shareholders failing to endorse changes to its constitution.
A bullish Sir Henry van der Heyden said at a media conference yesterday afternoon farmers delivered a "strong mandate" for TAF at yesterday's special meeting.
He is also confident they won't vote down constitutional changes - which require 75% support - a second time when the same resolution goes to November's annual meeting.
"We've missed out this time but we'll actually recommend the same resolution to our farmers in November.
"It's not the first time I've had to take the same resolution back to farmers. It has probably happened two or three times before. It's nothing unusual.
"I do call it the co-operative way, and it's part of the process to get unity."
He said later: "I know the co-operative reasonably well and I think I've got to be a bit careful what I say. But I'd be very surprised if farmers voted it down for the second time."
Sir Henry says as "a matter of policy" the board will adhere "very strictly" to the conditions set out in yesterday's failed resolution.
John Wilson, the chairman of Fonterra's capital structure committee, says despite farmers voting down the constitutional changes the board intended to operate TAF "well within" the thresholds identified in those changes.
"It's business as usual, really - we'd just like to see those thresholds brought into the constitution in the future."
Fonterra director John Waller did not think limits on the fund would deter investors - who might get their hands on the units as soon as November.
"I'm comfortable that the tightening up is the right thing to do for the co-op and for the farmers, and I don't think it will have an adverse impact on investors."
TAF will establish a $500 million fund into which farmers can sell their Fonterra shares, while retaining their voting rights and receiving the usual payment for milk produced. Outside investors will be able to buy the units on the stock exchange and receive a dividend.
Under the proposed constitutional changes - which were only supported by 72.8% of shareholders who voted yesterday, short of the required 75% - Fonterra's board wants to limit the unit fund beyond previously agreed limits.
Those changes are:
# Decreasing the fund's size from 25% to 20% of total shares on issue.
# Decreasing the number of so-called "dry" shares on issue from 25% to 15% of total shares.
# Capping at 33% how many so-called "wet" shares a farmer can sell the economic rights to in the fund.
Wet shares are "production-backed" shares that farmers receive for each kilogram of milk solids produced. Dry shares are extra shares above the recent or expected production, which do not attract voting rights.
Despite the 20% limit on the unit fund, Mr Wilson says the board intends to run the shares between 7% and 12% of total shares.
Sir Henry says he is confident farmers will rally behind the scheme after their "final say", with a "wide majority" embracing TAF.
"I would love to have had a couple of per cent more but farmers always had the final say.
"Let's not forget, two against one actually voted here and I think that's a solid mandate. It's a pretty good result."
But what happens if yesterday's resolution fails in November?
Sir Henry says: "I'll worry about that once I get there."
NBR ONLINE readers will note a familiar ring to that final comment. Last week, Fonterra revealed there was no plan B if TAF was thrown out.