Ex-Fonterra Suppliers Face Stricter Share Sell-Down Requirements

This follows concerns from rural professionals and farmers that the co-op could face a potential overhang of shares impacting the market by 2036.

Ceased shareholders, holding onto their Fonterra shares, is also seen as counter to shares being owned by supplying members as foundational to the co-operative structure.

From the compliance date of the season beginning 1 June 2027, ceased suppliers will move to a more staged reduction requirement for shares they may choose to hold onto after ceasing supply.

They will need to either:

• Sell their shares progressively each year over their reduction period – either 3, 5 or 10 years.

or

• Waive their right to receive dividends going forward on shares they would otherwise be required to sell progressively each year – noting that all shares must still be sold before their reduction period ends in 3, 5 or 10 years.

Fonterra’s board wrote to farmer shareholders about the changes this morning.

Speaking at the co-op’s annual meeting in Hamilton this morning, chair Peter McBride says the changes further strengthen the co-operative's capital structure going forward.

When flexible shareholding was introduced in 2023, the timeframe by which ceased suppliers could hold onto shares was extended to provide flexibility during a period when Fonterra's share price was adjusting to the change.

Since then, the co-op's performance has strengthened, supporting higher returns to shareholders and a recovery in the share price.

Over time, this has contributed to a build-up of shares held by ceased suppliers and their permitted transferees. As November 6, 2026, ceased suppliers and their permitted transferees held approximately 213 million shares, around 13% of shares on issue.

McBride says the punchline is that the value of a Fonterra share has more than doubled since 2021, a return of around 132%, or about 17% per year.

“Given those returns, it's no surprise that many ceased suppliers are holding onto their shares

for longer – and that could become a problem over time.”