Friday, 18 August 2023 15:37

Bad day ends on high note for Fonterra farmers

Written by  Sudesh Kissun
Fonterra will pay out $800 million today as capital return to shareholders. Fonterra will pay out $800 million today as capital return to shareholders.

A day of bad news for Fonterra farmers is ending on a high note – the co-operative is paying out $800 million today as capital return to shareholders.

In a statement to NZX, Fonterra confirmed that the capital return was implemented yesterday by way of a court-approved scheme of arrangement under Part 15 of the Companies Act 1993 (Scheme).

“Payments to shareholders are being processed today in accordance with the terms of the Scheme,” the co-op says.

The capital return has been funded by sale of co-op assets including its successful Soprole business in Chile.

Fonterra purchased one out of every six shares held by each shareholder for $3/share repurchased. This is equivalent to 50 cents for each of the six shares.

At the same time, one share held by each shareholder, which is not bought by Fonterra, will be subdivided so that each shareholder will end up holding the same total number of shares as they held before the repurchase.

The capital return provides some relief to Fonterra farmers, who this morning faced a second cut to the forecast milk price in two weeks.

In May Fonterra announced an opening 2023/24 season forecast Farmgate Milk Price range of $7.25 to $8.75/kgMS, with a midpoint of $8/kgMS.

Two weeks ago, it was forced to slash the mid-point by $1 to $7/kgMS. This morning it shaved another 25c of the mid-point.

The co-op says a slump in global dairy prices has forced the revision of the forecast milk price.

On Global Dairy Trade, dairy prices are now at their lowest point since late 2018, while WMP prices are at their lowest point since this time in 2016.

The Government has also come out today with its emissions pricing plan for the agriculture and the proposals have been roundly rejected by farmers.

The Government has shifted farm-level emissions reporting requirements into quarter 4 of 2024; emissions pricing won’t start until two years from now in quarter 4 of 2025.

Work will also get underway to allow scientifically validated forms of on-farm sequestration into the ETS, which can help reduce the cost to farmers.

DairyNZ says the agriculture emissions pricing plan released by the Government today is thoughtlessly timed and lacks the detail dairy farming needs for a viable solution.

DairyNZ chair Jim van der Poel says today’s outcome comes after a significant delay and does not reflect the progress the dairy sector has been seeking.

More like this

Mixed legacy

OPINION: You're never as good as when you're dead, and with due respect to Theo Spierings' family, the Hound can't let the death of the former Fonterra CEO pass without mentioning the parlous state he left Fonterra in when he exited in 2018 - having pocketed well north of $30 million over seven years.

Musical chairs

OPINION: DairyNZ's director elections has seen scientist Jacqueline Rowarth re-elected for another three-year term.

$500k for chair

OPINION: Fonterra's chair will be paid nearly $500,000 if shareholders approve a proposal by the directors' remuneration committee.

Featured

New ag degrees at Massey

Changing skill demands and new job opportunities in the primary sector have prompted Massey University to create a new degree course and add a significant major into another in 2025.

The show is on!

It was bringing in a new Canterbury A&P Association (CAPA) show board, more in tune with the CAPA general committee, that has ensured that Christchurch will have a show this year, says CAPA general committee president Bryce Murray.

National

'Quite a journey'

Former Synlait chief executive Grant Watson says the past two years have been quite the journey.

DairyNZ levy to increase?

Retiring chair Jim van der Poel has used his final AGM to announce the intention to increase the DairyNZ farmer…

Former Fonterra CEO dies

Former Fonterra chief executive Theo Spierings passed away in the Netherlands over the weekend.

Machinery & Products

Milk Sustainability Centre launched

The recently announced Milk Sustainability Centre – a collaboration between global giant John Deere and milking and feed specialists De…

Data connection made easier

New Holland and Case IH are introducing new advancements in their precision technology stack to make farming easier and more…

» Latest Print Issues Online

Milking It

Feed from farmers

OPINION: The country's dairy farmers will now also have a hand in providing free lunch for schools.

Brighter future

OPINION: The abrupt departure of Synlait chief executive Grant Watson could be a sign that Chinese company Bright Dairy, the…

» Connect with Dairy News

» eNewsletter

Subscribe to our weekly newsletter