'Exciting chapter' for dairy

Willy Leferink.
Willy Leferink.
Trading Among Farmers could be the start of a "highly innovative and exciting chapter" in Fonterra's history, Federated Farmers dairy chairman Willy Leferink believes.

Fonterra last week unveiled details of the farmer shareholder supply offer which allows farmer shareholders to sell the economic rights of some of their shares to the Fonterra shareholders' fund, and the prospectus and investment statement for the fund allows the public to consider buying units in it.

Given debt pressures facing some farmers, selling a percentage of their economic interest in Fonterra (no more than 7%) could be attractive, Mr Leferink said.

"It is an option that has never existed before and I think some farmers will take it up."

New Zealanders would be able to share the success of the dairy industry, albeit indirectly, through NZX listed funds, which could also build an understanding of what dairy farmers did, he said.

The number of external unit holders depended on the take-up of farmer suppliers. If each of those invested $50,000, that hit the $525 million upper limit set for the fund.

"That won't happen but we can depend on an exceptionally high level of industry interest. It is why I see potential for the greater use of 'friendly capital' from retired farmers, sharemilkers and even Fonterra's own staff."

That could enhance pathways into the industry and many sharemilkers would be thrilled at the prospect of buying fund units because units were convertible to shares, should a unit holder go farming in their own right.

"It is an innovative means to build and broaden someone's capital towards the ultimate goal of farm ownership," he said.

Fonterra Shareholders Council chairman Ian Brown emphasised the offer provided an opportunity to invest in units issued by the shareholders' fund, not to buy Fonterra shares.

"Voting rights and shares have and will always be linked to milk production. This principle is rock solid and a lot of hard work has been done over the past two-plus years to ensure 100% supplying shareholder ownership and control of Fonterra is secured," Mr Brown said.

The offer opportunity was a chance for investors to engage with Fonterra "like never before", which could only be a good thing for the co-operative.

 

ODT/directory - Local Businesses

CompanyLocationBusiness Type
EntityBalcluthaClothing
Fushion Hair DesignOamaruHairdressers
You’ll Say Wow Carpet CleaningDunedinCleaners
Guthrie Bowron QueenstownQueenstownHome Furnishings