Revamped Fonterra to be ‘more capital-efficient’
Fonterra chair Peter McBride says the divestment of Mainland Group is their last significant asset sale and signals the end of structural changes.
Only 20% of Fonterra shareholders supported the motion by farmer Murray Beach, Marlborough.
At Fonterra's annual meeting in Palmerston North today and before the vote, Beach told shareholders that the co-op's strategy to expand was a burden on farmers. The motion was not supported by either Fonterra's board or the Shareholders Council.
Fonterra director Malcolm Bailey told the meeting that Beach's motion, if passed, would create a major problem for the co-op.
"We will end up with extra milk production that we wouldn't be able to process," he says.
Shareholders Council chairman Ian Brown says he had dialogue with Beach after he had filed the motion with the board.
"What is suggested by Murray Beach is not prudent," Brown says.
One shareholder told the meeting he sympathised with Beach's motion but would not vote for it.
Fonterra chairman John Wilson says he was not surprised with Beach attracting 20% support.
Beach says his remit wasn't a knee-jerk reaction to this year's low forecast. Rather, it reflects two poor years, followed by one good, and now a "really bad year."
"We should be getting more money from Fonterra than the other milk companies are paying their suppliers but we're not."
Beach adds he's not totally against Fonterra's development plans, particularly those in New Zealand, but believes the cooperative should reduce debt before embarking on more expansion which is effectively at farmers' expense.
