Couple want Fonterra to listen, reply

A dairy farming couple's letter of concern to Fonterra about board and management decisions has grown into a major campaign, with them receiving "hundreds and hundreds" of phone calls.

Kevin and Andrea Marsh, of Bay of Plenty, aired their concerns in Farmers Weekly last week and support has been such that they expect to have the required numbers within three weeks to force an extraordinary general meeting of the company.

Asked if shareholders had lost confidence in the country's largest company, Mrs Marsh said "No".

"The total message is that farmers in New Zealand want the Fonterra board to listen and respond," she said.

Since August, Fonterra had made decisions which Mrs Marsh said were not expected by a co-operatively owned company, but which seemed designed to strengthen Fonterra's balance sheet at the expense of farmers' balance sheets.

Shareholders were angry at Fonterra's decision to stop accepting milk under contract, meaning farmers had to buy one share for each kg of milk solids (kg/ms) they supplied.

Mrs Marsh said there was also anger the co-operative removed the share buffer, which allowed farmers to supply a portion of milk for which they did not own shares. This meant farmers were not penalised if there was a particularly productive season.

Shares bought at the start of the season for $5.57 were now worth $4.47.

The payment schedule had also been changed, with settlement payments being made later in the year, affecting farmer cashflows.

"All these decisions have put many businesses in precarious positions," Mrs Marsh said.

She said the letter of concern to Fonterra chairman Henry van der Heyden initially went unanswered, so she released it to a farming newspaper which published it, provoking an unexpected reaction from farmers.

"We have had hundreds and hundreds of phone calls. The phone hasn't stopped in nearly two weeks."

Even though dairy farmers were expecting their third highest milk payout on record, Mrs Marsh said Fonterra forecasts at the start of the season of a $7 kg/ms payout prompted early season capital investment and some farmers to borrow money.

The combination of a falling payout and changes to the payment schedule meant many farmers were now struggling, with estimates 40% of dairy farmers would make a loss this year.

The couple needs support from shareholders who own 60 million of Fonterra's 1.2 billion shares to call the extraordinary general meeting.

Fonterra spokesman Graeme McMillan said the company took the Marshes' concerns seriously, and a director and the Fonterra Shareholders Council had met them. The company would not discuss the issue through the media, he said.

The first of up to 70 scheduled meetings around New Zealand between directors and shareholders would be held on Monday.

Shareholders council chairman Blue Read said he had met the Marshes and had similar concerns to them.

"Our view is we respect their raising of these issues. A number of issues they have raised, we've been working on for some time."

They included the withdrawal of contracted milk and the lowering of the share-buffer, but he said Fonterra had to look after its balance sheet as much as those of its co-operative shareholders.

- neal.wallace@odt.co.nz

 

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