Tuesday, 20 December 2011 15:05

TAF update? What update?

Written by 

FONTERRA IS on the slippery slope towards demutualisation and a board “update” on the cause, the Trading Among Farmers proposal, yet again failed to recognise this, says one of a growing number of shareholders calling for a second vote on the proposal.

South Canterbury dairy farmer Leonie Guiney is one of several shareholders who, after seeking expert legal advice, says the current proposal will see farmer control undermined.

Fonterra’s Sky TV broadcast on Friday (December 16) “had no update in it” and while “it’s positive Fonterra has acknowledged farmers have an issue with the shareholders fund structure,” Guiney says that acknowledgement has only come as a result of grassroots shareholders exposing the threat TAF presents.

“What we’ve discovered is that the locked box is in fact an empty box. The asset was sitting on the trust balance sheet in the proposal all along, completely compromising the commitment of 100% farmer ownership and control.”

For nearly two years, Fonterra’s board and management have been saying the TAF proposal will retain 100% farmer owner and control, but with the asset corresponding to shares showing on the unit trust’s balance sheet, unit holders, ie outside investors, would have legal rights under company and trust law to expect trust managers to act in their best interests. In effect that would be to maximise dividend, and minimise milk price, explains Guiney.

“Now we have been told they [Fonterra management] have three more options, the detail of which they are working on, and one of them is leaving the current proposal as is!

“How can Sir Henry keep repeating ad nauseam the line about 100% ownership and control and leave the current proposal on the table?”

Assurances shareholders ‘will be informed in due time’ from Fonterra’s board also ring hollow, she says.

“How many times have we heard this? How much closer is this to being pushed through parliament?

“But the biggest question of all is this – at what point did our cooperative’s purpose shift from looking after the interests of its co-op members and owners to looking after the interests of future investors in the NZX , including the NZ Govt?

“How do we halt this no longer subtle move towards demutualisation of our cooperative? How do we as the producers of the milk protect future generations of milk producers against the short-term gain mentality of those who would prefer to trade?”

Guiney is also concerned at how the issue is being reported in certain media outlets, given NZX would be likely to benefit from a demutualisation of Fonterra.

“Remember, NZX now owns both NZ Dairy Exporter and Farmers Weekly.”

Suggestions in the latter, December 19, that 4% dry shares in Fonterra as of July 2011 ‘is one measure of farmers’ appetite to expose themselves to non production linked share ownership and dividend income’ also grate.

“To me 4% looks like a very poor appetite and is in reality just a reflection of the expected  fluctuation in milk production due to normal climatic variation, possibly plus a little headroom on farms that anticipate expanding output...

“We have no appetite for ‘non production linked share ownership’ and see it as the biggest risk to the future of our milk price and cooperative.”

A Fonterra spokesman re-iterated to Rural News that the Board, Shareholders’ Council and Management remain totally committed to 100% farmer ownership and control, and they are in regular contact with shareholders about TAF and getting their feedback.

“This will continue into the New Year and we have advised our farmers that there will be a round of farmer meetings from Jan 31 – Feb 3.”

More like this

Chinese strategy

OPINION: Fonterra may have sold its dairy farms in China but the appetite for collaboration with the country remains strong.

LCAs tackle false narratives

The quest to measure, report and make sense of the energy that goes into food production has come a long way in the past 25 years.

$3b windfall?

Fonterra's proposed sale of its global consumer business could fetch over $3 billion but not all proceeds will end up in the pockets of farmer shareholders.

Featured

Better animal genetic gain system

A governance group has been formed, following extensive sector consultation, to implement the recommendations from the Industry Working Group's (IWG) final report and is said to be forming a 'road map' for improving New Zealand's animal genetic gain system.

SIDE 2025's new schedule, venue

Annual farmer gathering, the South Island Dairy Event (SIDE), is set to make history as it heads to Timaru for the first time.

Taranaki piggery goes solar

Installing 400 solar panels at their Taranaki piggery and cropping operation will have significant environmental, financial and animal welfare benefits for the Stanley family.

Editorial: Keep FTAs coming

OPINION: The dairy industry will  be a major beneficiary of a new free trade deal between NZ and the Gulf Co-operation Council (GCC).

National

Organic sector backtracks on GE

Organics Aotearoa New Zealand (OANZ) says the Government’s new gene editing and genetic modification reforms could leave New Zealand as…

$3b windfall?

Fonterra's proposed sale of its global consumer business could fetch over $3 billion but not all proceeds will end up…

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

Chinese strategy

OPINION: Fonterra may have sold its dairy farms in China but the appetite for collaboration with the country remains strong.

Not fair

OPINION: The Listener's latest piece on winter grazing among Southland dairy farmers leaves much to be desired.

» Connect with Dairy News

» eNewsletter

Subscribe to our weekly newsletter