Survey shows most Fonterra farmers plan to use capital return for debt reduction
A large slice of the $3.2 billion proposed capital return for Fonterra farmer shareholders could end up with the banks.
This issue has arisen for some farmers after they adopted 16-18 hour milking schedules and taken on 1arger herds.
Fonterra in late January wrote to shareholders asking them for proposed milking times. The letter suggested rewarding (with bonuses) farmers who milked within their stated milking times, but penalising (with fines) those still milking when the tanker arrived.
This caused anger and confusion among farmers, who vented their concerns at shareholder meetings, during calls to Fonterra and in conversations with farmer representatives.
Fonterra Shareholder Council chairman Simon Couper says he does not favor the proposed bonus/fine scheme. He has yet to hear what other farmers think of it. "We don't want to see farmers penalised for what is essentially their business," he says.
Farmers spoken to by Federated Farmers Auckland Dairy chairman Phillip Bell strongly oppose fines or bonuses, and some wonder why the matter has been raised. "They don't want to be pinged or rewarded for this. They feel there are better things they could be credited for and better things they could be pinged for."
Fonterra general manager for milk supply Steve Murphy admits it is not a big issue globally but something individual farmers – especially those on 16 - 18 hour milking rotations – could sometimes struggle with.
"We have had an informal system in place in the last few years where people called us up and told us what hours it was OK to pick up their milk. This is an attempt to cement that. We accept the challenges faced by people milking 16-18 hours a day and this is our way of acknowledging that."
Murphy says early indications from farmers' meetings are that the bonus-fine system is "a bridge too far".
Bell suspects the biggest problem was discussion of fines and bonuses in the survey letter. "If anything it was premature. It felt a bit cold, making it look like they were going to ping you."
Murphy says the co-op is unlikely to drop the punishment/reward concept of milk window revision completely, instead trying to find suitable middle ground.
"The great thing about a cooperative is making it work between everybody."
