What Would Synlait Be Worth to Fonterra or a2 Milk?
Speculation of a possible joint move by Fonterra and a2 Milk to buy Synlait raises a much bigger strategic question, says agribusiness expert Dr Nic Lees.
"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% endorsement, 2% short of the 75% 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," Leferink says.
Meanwhile the Fonterra Shareholders' Council says it is proud of the highest every voter turnout in the history of Fonterra.
The council, which safeguards the interests of the Co-op's 10 500 Shareholders, said 85% of milk solids voting was a great result for the co-op and showed the high level of engagement its shareholders had and the importance they attributed to the Trading Among Farmers (TAF) decision.
Chair of the Fonterra Shareholders' Council's representation committee, Greg Mitchell: "The fantastic united approach from councillors, directors, area managers, networkers and our shareholders throughout the country has been instrumental in securing this outcome.
"We have been driving this for the past month and we could not ask anything more of our farmers than them exercising their right of control by voting."
With a convincing 66% vote in favour of implementing TAF the co-op's board have stated that the result means Fonterra will move forward with TAF.
Shareholders' Council chair, Ian Brown said the council will, as always, take a considered approach to the board's decision.
"Shareholders have done their part and the council will now discuss this matter in depth at our next meeting in July."
