Farmers approve Fonterra TAF scheme by 66%

UPDATE: Fonterra farmers have approved the controversial trading among farmers (TAF) scheme.

The resolution for TAF received a 66.45% vote in support at Fonterra’s special meeting today, with two out of every three votes in favour.

The results have just been announced – revealing a clear mandate for change in New Zealand’s largest company.

However, the constitutional changes which would tighten limits on the size of the Fonterra Shareholders’ Fund, did not reach the 75% threshold.

They only received 72.8% support.

Fonterra chairman Sir Henry van der Heyden says the board will operate TAF under those strict controls regardless and the resolution will be taken back to shareholders later in the year.

Some 1185 farmers have gathered at Claudelands Arena in Hamilton to vote on the resolution today.

As many as 75% of the 10,500 Fonterra suppliers had already cast their vote online.

Sir Henry says the final vote attracted a record voter turnout.

And the result was the clear mandate the board was looking for to implement TAF, he says.

“Our farmers have voted in big numbers, representing 85% of the co-op’s milksolids. It is great to see so many taking part and having their say.

“Now we can move forward with this important evolution in our capital structure,” he says.

“We’ve spent six years talking about capital structure and it has been a rigorous debate and process.

"Our farmer shareholders have made a great contribution and the final version of Trading Among Farmers is all the richer because of that input.”

The result of the vote is as follows:

# Resolution 1: Trading Among Farmers 66.45%.

# Resolution 2: Constitutional Changes for Trading Among Farmers 72.8%.

# Resolution 3: M. Beach Proposal 20.2%.

# Resolution 4: Upson Downs Limited Proposal 23.26%.
 

2.15pm: Fonterra chairman Sir Henry van der Heyden is confident most farmers have voted for the controversial trading among farmers scheme.

The board now has to decide if the support they've received constitutes a solid mandate.

Sir Henry spoke to NBR ONLINE in Hamilton after today's three-hour special meeting, which was beamed to seven venues around New Zealand and a video link to chief executive Theo Spierings, who is in Holland reportedly for family and business reasons.

Sir Henry says: "I think it will be over 50% but we've got a decision to make this afternoon on what a solid mandate is, so that's what the board will have to discuss."

He was pleased with the turnout of more than 1000 farmers.

"I think everyone was well-behaved - I do think people are TAF-fed out too, though."

Sir Henry is expected to hold a press conference at 4pm at Hamilton's Claudelands Event Centre. 

2pm: Fonterra chairman Henry van der Heyden has just closed a special meeting to consider the trading among farmers scheme.

He says regardless of the decision the company would be stronger because of the debate.

"I hope we can deliver you good news."

After the meeting, Te Awamutu farmer and TAF supporter Sharryn Barton told NBR ONLINE she thought most people support the scheme.

"I actually think it's a good idea and it's going to help Fonterra grow. I think there's probably some risks in there but everything has risks - forming Fonterra in 2001 was a risk in itself.

"The shareholders so far, or the farmers, have shown good judgment in the people that they've elected to run our company."

She said the debate was gentlemanly, as was typical of farmers.

"I think there's been a lot of debate going on before today's meeting so I think people had come to the meeting pretty well decided. Maybe they needed a few points of clarity to confirm their decision."

William van der Poel, a farmer at Tuakau, near Pukekohe, liked the idea of farmers being able to trade shares but had reservations about outside investment, especially from overseas.

"I feel it will be a slippery slope."

1.40pm:

Voting is under way at a feisty Fonterra shareholders' special meeting on trading among farmers (TAF), with a result expected later this afternoon.

Two company resolutions are being voted on, giving the board approval to progress TAF and making changes to the co-operative's constitution.

Plenty of speakers at today's meeting spoke in favour of TAF, with one farmer from Invercargill saying it would make the co-op more stable and progressive.

Fonterra chairman Sir Henry van der Heyden said TAF allows the dairy giant to control its own destiny.

He says a board meeting will be held this afternoon to decide its future.

However, one dissenter said a capital redemption risk would, under TAF, be replaced with a supply redemption risk.

Another said a vote should not be taken before the scheme is finalised and legislation has been passed through parliament.

Two resolutions from shareholders are also being considered: to abandon TAF, and for TAF to be progressed only with 75% support. These are opposed by the board.

Nelson's Murray Beach, who put the shareholders resolution to abandon TAF, says the board is seeking a blank cheque to advance TAF even though it is not finalised.

Another opponent said the risk of capital redemption, the board's underlying argument for TAF, had been overstated.

Fonterra director Malcolm Bailey says there has been full disclosure of all the information and the due diligence has confirmed that shareholders would retain 100% control and ownership under TAF.

Another speaker said of the fact TAF could advance with only 50% support: "50% is not unity".

Comments from both camps - pro and anti-TAF - were met with applause, and some controversial comments were met with loud murmurs at Hamilton's Claudelands Events Centre.

Sir Henry reassured farmers they will still decide their directors under TAF.

He was asked about TAF rules which say unit holders will be consulted about the appointment of independent directors.

To the questioner, from Nelson, Sir Henry said it was a process matter.

"Yes, there will be a discussion between the board, led by the chair, and the unit fund.

"A conversation will be had but it's still the farmers that decide who their directors are, both elected directors and appointed directors."