Agriculture Minister David Carter says he is pleased Fonterra shareholders delivered a "resounding" endorsement of constitutional change needed to rejig the cooperative's capital structure.
"This is a critical step towards Fonterra developing a more stable capital base," Mr Carter said.
He said that Fonterra management listened to its farmers.
Fonterra directors have previously ruled out any sort of sharemarket listing for the business, after being forced by farmer-shareholders to back down on a November 2007 capital restructure proposal involving a partial listing.
Mr Carter said the government -- in consultation with all dairy industry stakeholders -- will determine how the current regulatory regime should be modified before the final design of the capital structure is announced.
Prime Minister John Key has promised to change the law to support the capital restructure, which he said would allow the giant cooperative to grow strongly into the future and deliver on its full potential.
The company's enabling legislation, the Dairy Industry Restructuring Act 2001 (DIRA), will need to be changed.
Separately, Mr Carter has been considering proposals for expiry of provisions in the Act.
Until now farmers have had to hold enough shares to cover the volume of their milkflows, and when those milkflows dropped -- because of bad weather, a farmer selling up to 20 percent of their production to another company, or quitting the cooperative altogether - Fonterra has had to find the cash to pay out the surrendered shares.
This exposure to "redemption risk" has cost the cooperative $1.9 billion in the past two years -- mostly because of drought -- but now Fonterra is set to quit that liability in the next few years, leaving farmers to cash in their shares by trading among themselves.
Federated Farmers today hailed the 89.85% vote -- from a record turnout of just under 78% of its farmers -- as "the most momentous thing in the cooperative's history," since it was formed in October 2001."
"This is truly a red letter day for New Zealand's dairy industry and for Fonterra," said the federation's dairy chairman Lachlan McKenzie of Rotorua.
"We have a decisive 'yes' vote to commence internal share trading," he said.
Fonterra's consultation for this change had been cohesive, insightful and executed in such a way that shareholders were given the confidence they needed to vote "yes".
"This vote now means that the bogey of capital redemption risk to Fonterra will subside once some key conditions have been met," Mr McKenzie said. "Assuming that, this has potential to become one of the highest value markets in New Zealand but that's still around a year off."
The proposed unit trust, a Fonterra Shareholders Fund, would enable members of the public to have exposure to dividend flows from New Zealand's largest export but was actually a flexible extension to the public securities Fonterra currently issued.
Mr McKenzie has previously said some farmers still wanted to see Fonterra directors off the board because of their involvement in the 2007 listing proposal. "Farmers have seen the adverse results from demutualisation overseas and that has driven a strong sense of farmers wanting to control the destiny of farmers," he said today.