Fonterra, Sharesies join to make share trading easier
Fonterra is teaming up with wealth app provider Sharesies to make it easier for its farmer shareholders to trade co-op shares among themselves.
Many Fonterra shareholders were disappointed with the interim results the co-op announced last month. Many feel they are not seeing a return on their investment.
I think we might be asking the wrong question. It shouldn’t be where’s the return on our investment, but rather where do we see the value of being part of a co-op.
At the moment the milk price we are paid is based on the Global Dairy Trade result. It is averaged across the season, less manufacturing costs, to put it simplistically. All the other companies should be achieving this anyway, with their products.
We know that only a portion of what Fonterra sells goes on GDT. The rest is sold through direct links to customers. I have heard many times that a bag of milk powder sold direct to a customer usually fetches more than a similar bag sold on GDT.
Let’s say Fonterra announced the dividend had increased to 60 cents. What would have happened? We would all be in a slightly better mood probably, and the value of the shares would probably have gone up to $10 or thereabouts.
Would that have solved Fonterra’s problems or made them worse? All you Fonterra shareholders now talking about leaving Fonterra -- would you now be saying you would stay put? Why?
Surely the dynamic encouraging you to leave is even stronger now. You still receive a similar milk price, but by cashing in your shares you get a whole heap more equity you can invest elsewhere. So by performing, Fonterra could actually create more of a problem for itself.
That brings us to the crux of the matter – the milk price. Everyone will be there or thereabouts. The dividend return as a percentage will generally remain static. So a farmer with a short term issue – be it expansion, or repaying debt, or a new farm purchase – will look at the books, see all those Fonterra shares sitting there and see a solution.
How can Fonterra make that farmer look at those books and see the long benefit of being part of a co-op, for the long term benefit of our industry and farmers in having a strong, dominant co-op in the New Zealand marketplace? Because experience overseas and in New Zealand shows that the dominant co-op will always set the price, and when you lose that dominant co-op expect poor returns to follow.
• Andrew Hoggard is Federated Farmers dairy chair.
Federated Farmers president Wayne Langford is claiming “some real success” on the 12 policy priorities it placed before the Coalition Government.
Federated Farmers is throwing its support behind the Fast-track Approvals Bill introduced by the Coalition Government to enable a fast-track decision-making process for infrastructure and development projects.
The latest report from ANZ isn’t good news for sheep farmers: lamb returns are forecast to remain low.
Divine table grapes that herald the start of a brand-new industry in Hawke’s Bay have been coming off vines in Maraekakaho.
In what appears to be a casualty of the downturn in the agricultural sector, a well-known machinery brand is now in the hands of liquidators and owing creditors $6.6 million.
One of New Zealand’s deepest breeder Jersey herds – known for its enduring connection through cattle with the UK’s longest reigning monarch, Queen Elizabeth II – will host its 75th anniversary celebration sale on-farm on April 22.
OPINION: Talking about plant-based food: “Chicken-free chicken” start-up Sunfed has had its valuation slashed to zero by major investor Blackbird…
OPINION: Synlait's financial woes won’t be going away anytime soon.