Tuesday, 23 November 2021 06:55

We're on the same page - McBride

Written by  Sudesh Kissun
Peter McBride says he can understand why the Government is not at this stage in a position to support DIRA changes to facilitate the proposal. Peter McBride says he can understand why the Government is not at this stage in a position to support DIRA changes to facilitate the proposal.

Fonterra chairman Peter McBride isn't too fussed with a Government threat to scuttle Fonterra's capital structure revamp.

Agriculture Minister Damien O'Connor has told the co-operative that the capital structure, currently before farmers for a vote, isn't consistent with the Government's policy objectives.

In a letter to McBride, O'Connor stated that at this stage it would be difficult for the Government to support regulatory changes needed to facilitate the proposals.

Fonterra farmers received the new capital structure proposal last week and will vote on it at a special general meeting in Invercargill on December 9. A copy  of O'Connor's letter was also sent to all farmer shareholders.

McBride told Dairy News that he was "happy" to receive the letter as it shows the Government's willingness to work with the co-operative on a new capital structure.

McBride agreed that some might take the letter literally while others will think it is supportive of the co-operative.

"I was happy to receive the letter," he says.

"It's clear that we share the same objective: to see a sustainable, efficient, high performing and innovative Fonterra.

"Our objectives are aligned."

McBride noted that O'Connor was "really supportive of co-operatives".

"The important point in the letter is that the Government will work with us."

The new capital structure will have a flexible shareholding structure, allowing all farmers more flexibility around increasing or decreasing their shareholding during their farming career.

It requires 75% support from voting shareholders.

It will also require Parliament to approve changes to the Dairy Industry Restructuring Act (DIRA).

O'Connor claims the current proposals "envisage a legislative change to remove key mechanisms that risk weakening performance incentives on Fonterra".

"Without alternative measures, I am not yet assured that these proposals would deliver the best long-term outcomes for farmers or the dairy sector as a whole.

"I am particularly concerned that the current proposals would create a higher risk of diverging shareholder interests inside the co-operative, between farmers with minimum shareholdings for supply only and those with larger shareholdings held for investment purposes.

"My concern is that this could result in competing shareholder priorities relating to Fonterra's future direction and strategy."

McBride says he can understand why the Government is not at this stage in a position to support DIRA changes to facilitate the proposal.

"We understand the Government is looking for further assurance that our proposal supports contestability, drives performance and innovation, and protects alignment of shareholder interests," he says.

"I have spoken to the minister since receiving his letter and remain confident that we can provide the Government with the necessary assurances and work together to find a regulatory framework that supports the flexible shareholding structure.

“One of the considerations will be a strong mandate for change from the co-op’s farmers.”

More like this

Cynical politics

OPINION: There is zero chance that someone who joined Fonterra as a lobbyist, then served as a general manager of Fonterra's nutrient management programme, and sat on the board of Export NZ, a division of lobbyist group Business New Zealand, doesn't understand that local butter (and milk and cheese) prices are set by the international commodity price.

Why is butter so expensive in New Zealand? Fonterra explains

Kiwis love their butter, and that's great because New Zealand produces some of the best butter in the world. But when the price of butter goes up, it's tough for some, particularly when many other grocery staples have also gone up and the heat goes on co-operative Fonterra, the country's main butter maker. Here the co-op explains why butter prices are so high right now.

Featured

T&G Global returns to profitability

Fresh produce grower and exporter T&G Global has overturned last year’s dismal performance by reporting a half year net profit of $1.7 million.

Rural backlash over plan to cut police staffing

Federated Farmers North Canterbury president Bex Green says two public meetings held this week should have made it loud and clear that rural families and businesses are concerned about proposed staffing changes at NZ Police.

DairyNZ thanks farm staff

August 6 marks Farm Worker Appreciation Day, a moment to recognise the dedication and hard mahi of dairy farm workers across Aotearoa - and DairyNZ is taking the opportunity to celebrate the skilled teams working on its two research farms.

Editorial: Getting RMA settings right

OPINION: The Government has been seeking industry feedback on its proposed amendments to a range of Resource Management Act (RMA) national direction instruments.

National

Machinery & Products

» Latest Print Issues Online

Milking It

Fatberg

OPINION: Sydney has a $12 million milk disposal problem.

Synlait snag

OPINION: Canterbury milk processor Synlait's recovery seems to have hit another snag.

» Connect with Dairy News

» eNewsletter

Subscribe to our weekly newsletter