Don't be left out of pocket, sharemilkers warned

To prevent any disruption to sharemilker income, Federated Farmers is advising all sharemilkers to discuss Fonterra Cooperative Group’s new payout with their farm owner or Fonterra shareholder. The Federation also stresses the need for the Dividend Related Payment Adjustment Form (DRPA) to be completed and returned before 28 February.

“Sharemilkers need to act quickly to ensure they get what they’re properly entitled to,” says Scottie McLeod, Federated Farmers Sharemilker Employers chairperson.

“Under Fonterra’s revised capital structure, the ‘value add’ portion of the milk solid payout that sharemilkers previously received a percentage of, will now be paid as a dividend to the Cooperative’s shareholders.

“Given Fonterra is legally obligated to pay this dividend directly to its shareholders, sharemilkers have to sit down with their farm owner or Fonterra shareholder to ensure their payment matches what was agreed upon in their contract.

“That’s why Fonterra developed the DRPA and sent it out to all of its shareholders before last Christmas.

“I cannot stress enough the importance of the farm owner and sharemilker completing the DRPA form together and returning it back to Fonterra before 28 February.

“The DRPA allows the Cooperative to make an adjusted payout from the milk price portion to the sharemilker but, if it isn’t completed, Fonterra will simply pay the farm owner – or shareholder – 100 percent of the payout.

“This would be bad news for affected sharemilkers, as they’ll have to arrange a late repayment that will likely affect their budgets. For the farm owner or Fonterra shareholder, failure to return the form could seriously impact their sharemilker relationship.

“It’s a joint responsibility really but neither party will be disadvantaged so long as they work together over the next few weeks.

“Meanwhile, Federated Farmers is reviewing the Variable Order Sharemilking Agreement but the current Agreement is still operative. The Federation’s intention is that sharemilkers should not be disadvantaged when the method of payment changes.

“The Federation is also working with Fonterra to organise meetings to outline the options available to sharemilkers following the capital restructure,” Mr McLeod concluded.