Fonterra shareholder vote on trading plan 'the right thing'

Federated Farmers has described Fonterra Cooperative Group announcing a special meeting that will see a final vote taken on Trading Among Farmers (TAF) as the right thing.  Part of TAF is the creation of a ‘Shareholders Fund’ that will see units sold to private investors.  

“Trading Among Farmers and the proposed Shareholders Fund is increasingly white hot, so we must thank the Board for trusting shareholders with the final say,” says Willy Leferink, Federated Farmers Dairy chairperson.

“Farmers like me voted for the principle of a shareholders fund but that was two years ago and was based on a concept.  We also thought it was tied to the cooperative’s constitution and not legislation currently before Parliament.

“There’s realisation that if we go down the TAF route, the Board doesn’t need to go back to farmer-shareholders until the fund hits 25 percent of the cooperative’s equity.

“This is a major decision for shareholders and shareholders must go into this with their eyes wide open.

“The Shareholders Fund and its focus on dividend are envisaged as a counterweight to farmers getting the most for the milk they produce.  All we want is for farmer-shareholders to be given the chance to have a final say as this is their cooperative and its future rests with them.

“TAF was a major issue discussed at our Dairy Council meeting in February and led to the following motion being passed and communicated to Fonterra’s board:

That Federated Farmers Dairy strongly recommends the board of Fonterra take the finalised TAF [Trading Among Farmers] proposal, inclusive of proposed DIRA [Dairy Industry Restructuring Act] TAF provisions, back to shareholder suppliers for another vote.

It is our view that the evolution in detail and complexity inherent in the TAF proposal, and yet to be released information, relative to what was initially voted on, deserves further consultation, understanding and debate among shareholders before it is advanced fully.  It is the Federation’s view that the current TAF proposal compromises the cooperative values and presents real risks to supplier shareholders maintaining 100% control and 100% ownership”.

“I think the Board deserves credit for taking this recommendation to heart and acting on it.

“What we now seek is confirmation the second vote will be run like 2010; a combination of physical meetings bracketed with a postal option for those who can’t make it,” Mr Leferink concluded.