Fonterra still has a fight on its hands - TAF opponent
Monday's slick Fonterra show in Hamilton was hard for the impartial observer to unravel.
Behind the huge video screens and beyond the dozens of black-coated and branded ("Dairy For Life") minions who wandered the aisles, voting boxes in hand, there seemed to be the hint of opposition and the smell of revolt.
The board characterised the two-to-one vote for the controversial Trading Against Farmers (TAF) scheme as a "strong mandate".
However, the company's PR spin of unity was let down by the failure of three-quarters of farmers to endorse proposed changes to the constitution - which apparently would have entrenched farmer power in the cooperative and restricted the size of the proposed unit fund to be accessed by outside investors.
Unlike the order displayed in the rows of vehicles at the Claudelands Events Centre - with its high proportion of four-wheel drives and personalised number plates - an observer left Fonterra's special meeting with a picture murkier than an effluent tank.
At the meeting, it was drilled into farmers that TAF would allow Fonterra to control its destiny. Again and again, Fonterra directors said even if the shareholders didn't support TAF, it was important the constitutional changes went through. Yet the voters had enough pause to disagree.
Fonterra chair Sir Henry van der Heyden said late in the afternoon he would be surprised if farmers voted against the constitutional changes when the same resolution was put to the annual meeting in November.
But he has a fight on his hands.
TAF not needed: opponent
Canterbury farmer Leonie Guiney, an ardent TAF opponent who owns four dairy farms with husband Kieran, says November's vote is not a done deal.
"It's not, in my opinion, a fait accompli that the same resolution will pass."
The mother-of-four and former farm business consultant, who farms 3000 cows in the shadow of Mount Dobson, near Fairlie, maintains there's no reason for outside investors to boost Fonterra's balance sheet.
She says through retentions, farmers have significantly bolstered Fonterra's balance sheet since 2007 and the company - New Zealand's biggest and the world's biggest dairy exporter - has emerged stronger after one of the world's worst credit crunches.
Mrs Guiney asks: "Is Fonterra really capital constrained?"
She calls TAF a "disguised float" for Sir Henry's "investor friends".
Because voting rights are apportioned by the kilograms of milk solids produced, she believes as little as one-in-two farmers voted for TAF.
"I think the 33% of the cooperative that has voted from an informed position against this, it's absolutely time that both council and the board start to engage - if they argue that Fonterra needs unity going forward, it's absolutely time that the [shareholders] council and the board start to engage with farmers who have genuine, informed, researched concern. Not emotional fear.
"We need to stop funding a PR campaign to sell a story to ourselves and start talking about the facts, with our own board and with our own council. And I see the board has no option but to engage with us.
"Unity is very, very important but it must be informed unity. I mean, lemmings are unified when they gallop off a cliff following their leader. We need unified and informed farmers in this cooperative to maintain our collective strength."
Mrs Guiney looks at overseas experiences attempts to introduce investor capital into cooperatives and worries for the future of Fonterra farmers - particularly if the share price rises and they feel they have no choice but to cash up and sell their milk elsewhere.
"I don't think farmers realise the implications of what we have done and I think only time will show the farmers how manipulated they have been."
Investors would welcome greater insight into earnings
Meanwhile, Forsyth Barr analyst Rob Mercer says the TAF scheme gives Fonterra the chance to present its financial numbers differently.
He says investors would welcome greater insight into its earnings from the various divisions and overseas arms, as well as more explanation of how the milk payout is determined.
"Both the dairy farmers and the investors in the shares need to have clarity around some objectivity in that determining of that payout - and that's where a lot of effort's gone [to date]."