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Henry van der Heyden
Fonterra shareholders look set this week to approve the
first two of three steps of its capital restructuring proposal,
but resistance to the third stage, which will be considered
next year, is already evident.
Farmer attention has already being drawn to that contentious
third step, the trading of shares among farmers, which will
not be debated at Wednesday's annual meeting in Ashburton.
Company and farming leaders appear confident the initial vote
on the first two stages - strengthening the share structure
and restricting the value of company shares - would get the
required support of 75% of voters.
Some have questioned whether Fonterra would achieve its goal
of attracting extra capital from shareholders, with farmers
more likely to use income from higher milk prices to reduce
debt and restore cashflow than buy extra shares.
Fonterra chairman Sir Henry van der Heyden said that at
recent shareholder meetings farmer focus had been on the
third stage of the plan, which he said he had not fully
considered or was one he wanted to discuss until after
Wednesday's meeting.
Sir Henry said Ashburton's meeting was "fundamental" in the
life and development of the dairy co-operative.
"It's probably in the same ball park as when Fonterra was
formed."
There has been plenty of discussion about reshaping
Fonterra's capital structure and Sir Henry said he was
pleased the issue was being addressed.
The announcement last week of a lift in the forecast payout
from $5.20 kg milksolids to to $6.05 kg/ms had boosted farmer
morale, he said, but the key was to translate that morale in
to the required 75% support of voters, and he urged farmers
to vote.
The increased milk price reflected market prices, he said,
but also the volatility, given that just six months ago
farmers were facing a $4.55kg/ms payout.
Federated Farmers Dairy section chairman Lachlan McKenzie
said the lack of farmer debate on steps one and two indicated
support, unlike step three which had attracted much more
attention and would need revising if it was to be supported.
Mr McKenzie said farmers were concerned the share trading
proposal, step three, shifted the risk from the company to
farmers.
It could also make it easy for outside investors to own some
of the company.
"Farmers are looking over the horizon and want to know what
the company would look like to 10 to 20 years time," he said.
Others have said the vexed issue of trading shares also came
with hooks, with demand and value likely to plummet in years
of low payout.
Some questioned whether it adhered to the co-operative
principle of fair entry and exit for shareholders.
