Fonterra Shareholders Council Says Trading Among Farmers a significant step

The Fonterra Shareholders’ Council today welcomed the co-operative’s move to consult with shareholders on Trading Among Farmers.

“A strong balance sheet is crucial for Fonterra’s continuing success. Trading Among Farmers would remove capital uncertainties that arise from the co-operative redeeming shares directly from farmers,” said Council Chairman Blue Read.

The Shareholders’ Council supports the concept of Trading Among Farmers, which the Board of Fonterra has today taken to shareholders for consultation.

Trading Among Farmers would see farmers buying or selling Fonterra shares amongst themselves, rather than redeeming them through the co-operative.

Mr Read said the third step of Fonterra’s capital restructure would represent a significant change for the co-operative.

“As well as a strong balance sheet it is essential Fonterra continues to provide supplying shareholders with:

• Certainty of milk collection;
• Confidence in the Milk Price;
• A Milk Price that pays farmers the maximum sustainable price for their milk;
• The ability to trade Fonterra shares at a fair price;
• Continued ownership and control of their co-operative; and
• Confidence in the future of their co-operative.”

The guiding principles of Trading Among Famers include eliminating redemption risk, keeping co-operative voting linked to share-backed milk supply; creating a stable farmer-only share trading regime, providing a tradeable pool of shares and ensuring there is a robust and transparent Milk Price.

“From a business perspective Trading Among Farmers would address the unwanted impact that share redemption has on Fonterra’s balance sheet,” Mr Read said.

“The Council supports the concept of Trading Among Farmers and we now want shareholders to help shape a final proposal that will see Fonterra continue to meet our co-operative’s needs,” he said.

“We want to keep Fonterra strong and farmer input is absolutely essential.”

About the Fonterra Shareholders’ Council

The Fonterra Shareholders’ Council is elected to represent the interests of Fonterra farmers to the Board of the co-operative and plays an active role in monitoring and assessing the governance and performance of Fonterra. There are 35 Councillors who are all shareholders elected by farmers in wards across New Zealand.