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
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.