Simple majority for TAF vote doesn't cut it

Fonterra is making a potentially fatal mistake by requiring a simple majority of farmers to endorse its Trading Among Farmers (TAF) capital restructure, says Labour’s Primary Industries Spokesperson Damien O’Connor.

“A simple 50% majority over such a significant change to New Zealand’s biggest company is insufficient to ensure a mandate for such major change.

“Concerns have been expressed that this second vote would not require the 75% constitutional mandate, and I believe Fonterra have constructed this vote knowing there is increasing concern over what these changes might mean for the company.

“The other votes to be taken on June 25, requiring constitutional changes, will no doubt be supported by farmers as these votes are designed to change conditions around TAF.  However, it is the primary vote on TAF which will be decided by just 50% of the farmer vote.

“If Chairman Henry van der Hayden wanted to ensure unity in the cooperative then he would have committed to a 75% vote before Fonterra introduces TAF and the open trading of units to outside investors.

“If farmers have any doubt, they should vote down TAF and take more time to consider what necessary change is needed.  The information that has been supplied to farmers needs to be read very carefully.

“My concerns lie with the influence investors will have on the company over time.  Their objectives will place tension on the milk price and the return to farmers that is the current primary driver of Fonterra as a cooperative company,” said Damien O’Connor.