Fonterra shareholders have spoken

With 66 percent of Fonterra shareholder-suppliers backing Trading Among Farmers (TAF), Federated Farmers is calling on the cooperative to unite. This call comes off an 85 percent turnout among shareholders.

"Whatever the result, we wanted it to be clear one and the shareholders have delivered it.  It was a reasonable voter turnout," says Willy Leferink, Federated Farmers Dairy chairperson.

"Attention now turns to completing the parliamentary stages of the Dairy Industry Restructuring Amendment Bill (DIRA) which will give effect to TAF.

“The second vote on the constitutional changes, unfortunately, only got a 73 percent endorsement, two percent short of the 75 percent requirement. Federated Farmers understands TAF will proceed under the B constitution voted on in 2010, until Fonterra’s AGM in November.

“Federated Farmers is disappointed this resolution did not quite make it, as this was the important one around putting controls on TAF.

“Now we have to ensure parliament puts the limits on TAF the Federation has asked for into DIRA as it proceeds with the legislation.

“There has been a lot of debate and some shareholders may feel embittered by the result.  I am asking them to hang in there to see if the many promises made about TAF are delivered.

“I would also like to see those from both sides put their hand up for leadership positions, either with us, the Shareholders Council or on the Board itself. The best long term protection shareholders can get is by being firmly inside the tent.

“In the meantime, Federated Farmers is asking Parliament to revise some aspects of the Bill following the TAF vote.

“The State is going too far by mandating ‘fair value’ as the way Fonterra must set its share price by. It should be a decision for the cooperative’s 10,500 shareholders and not politicians.

“Given Parliament wants to dictate share price setting and even the milk price framework, we wish to see legislative protections put around the Fonterra Shareholder’s Fund.

“We would like to see Fonterra’s constitution reinforced in the Bill, especially when it comes to the size of the Shareholders Fund, number of dividends a farmer can trade into it and a maximum number of units any one outside investor can hold in the fund.

“Having these protections in the Bill would remove the sting some shareholders feel while reducing residual concerns a great many more possibly harbour. Certainly it would not be inconstant with other interventions already contained in the Bill.

“Given farmer-shareholders are promised even greater things from TAF going forward it is now on management and the Board to really deliver,” Mr Leferink concluded.