100% Ownership and Control a Priority in Trading

100% Ownership and Control a Priority in Trading Among Farmers

The Fonterra Shareholders’ Council is refuting suggestions that possible changes to the co-operative’s capital structure involve direct public investment in Fonterra.

Blue Read, Chairman of the Fonterra Shareholders’ Council, stressed today that
Fonterra’s third step of capital restructuring – known as Trading Among Farmers – has been developed from the starting point that Fonterra must be 100% controlled and owned by farmer shareholders.

“The Fonterra Shareholders’ Council has worked on behalf of supplying shareholders to make sure that Trading Among Farmers locks in farmer control and ownership,” Mr Read said.

“There has been no compromise and there should be no compromise,” Mr Read said.

He was responding to some media headlines that suggest the public might be able to buy into the farmer-only co-operative as part of the Trading Among Farmers concept.

The Fonterra Shareholders’ Council has been in discussions about the concept with the co-operative’s Board. Throughout these discussions the Council has had some bottom lines for farmers.

“We have been very clear. It is essential Fonterra is 100% owned and controlled by its supplying shareholders. Farmers have told us this is what they want,” Mr Read said.

What Trading Among Farmers does propose is a Fonterra Shareholders Fund as a funding tool to help supplying farmers stay in the co-operative.

The Fund could help supplying shareholders retain shares in Fonterra they might otherwise want to sell, or help farmers purchase shares if they need them. The Fund would pay supplying shareholders for the right to receive dividends from their shares and the potential gain or loss from any change in the value of their shares

“Unit holders in the Fund would not own shares in Fonterra and therefore would not have any voting rights. Neither would the Fund,” Mr Read said. “All voting rights would remain with supplying shareholders and supplying shareholders would still be the owners of their shares,” he said.

The suggested Fund could be invested in by people such as sharemilkers and retired farmers and the public, but they would not be investing in Fonterra.

Most importantly, supplying shareholders would continue to be paid their full share-backed Milk Price and would retain all voting rights in their shares based on their share-backed milksolids.

Mr Read noted it is a fundamental co-operative principle of Fonterra that shares can only be held by the co-operative’s supplying shareholders.

“Likewise all voting rights remain with supplying shareholders; no-one else.”

Trading Among Farmers is being consulted on with supplying shareholders by the co-operative’s Board. The Council has welcomed the move to consult and wants farmers to now help shape a final proposal.

ENDS

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