Rules laid down for Fonterra TAF move

Total farmer ownership and control of Fonterra is non-negotiable, Fonterra Shareholders Council chairman Simon Couper says.

Mr Couper was responding to "extensive coverage and discussion in some quarters" that Trading Among Farmers (TAF) presented a threat to farmer ownership and control of the dairy co-operative.

In a message to shareholders and the board, he said, when it came to TAF, it was "100% shareholder ownership and control of the co-op or nothing".

"Farmer ownership and control of our co-operative is essential to our core beliefs.

When the shareholders council is reviewing the structure and implications of TAF, retaining 100% ownership and control is non-negotiable.

If there is any real risk that 100% ownership and control is not retained by our co-op, [the] council will not vote to support moving to TAF," he said in a statement yesterday.

In June last year, Fonterra shareholders voted overwhelmingly in favour of changes to the co-operative's constitution to allow steps to be taken to implement TAF at a future date.

That would involve farmers buying and selling Fonterra shares from one another through a market, rather than via the co-operative.

Mr Couper also sought to address the issues around the role of the custodian, which had been the subject of much discussion.

While some of the detail around TAF might have evolved with respect to the role of the custodian, the intent of retaining 100% farmer ownership and control had not, he said.

The shareholders' fund, the size of which was unconfirmed at this point, was also part of the structure voted on. However, it had been cause for conjecture "in some circles".

Ultimately, the Fonterra board had the obligation and responsibility to prove to the council and shareholders the controls and protections for 100% farmer ownership and control would be embedded in the proposed structure.

That included the role of the custodian and the fund.

While waiting for the board to release the final details, the council had a comprehensive review process in place to evaluate TAF.

A lawyer with extensive senior corporate law and government advisory experience was constantly reviewing and questioning the provisions contained within the structure.

DLA Phillips Fox, a specialist regulation and corporate law firm, which had been involved in the TAF process on behalf of shareholders from the outset, would carry out a complete evaluation of the final TAF document and the controls within it, after which the council would look to vote on it, Mr Couper said.

sally.rae@odt.co.nz

 

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