Farmers' call
OPINION: Fonterra's $4.22 billion consumer business sale to Lactalis is ruffling a few feathers outside the dairy industry.
OPINION: What a difference a year can make.
Twelve months ago, Fonterra shares plummeted to $2 on the New Zealand Stock Exchange.
Compare that to seven years ago, when it was hovering around $6.50. Last week, shares were trading around $4.50. In the last financial year, Fonterra’s market capitalisation is up $4.3 billion to $7.7 billion.
The shift in share price reflects performance, and the returning confidence farmers have in Fonterra. And credit for this must go to Fonterra’s management team and staff.
It’s been a tough few years for the co-op’s farmer shareholders. Rising costs, interest rates and below par milk price have been taken a toll on dairy farming.
Thankfully, on-farm costs are easing and a potential $10 milk price on the cards this season means many farmers will be either breaking even or making a profit after a tough period. For these farmers, a rejuvenated co-op with a healthy share price puts the icing on the cake.
At Fonterra’s annual general meeting this month, the board and management expressed confidence in its revised strategy and the potential to create further value for shareholders.
The co-op has lifted its target average return on capital to 10-12%, up from 9-10%. There’s also a commitment to return more of the co-op’s earnings to shareholders, with an enhanced dividend policy of 60-80% of earnings, up from 40-60%. And the co-op is committed to maintaining the highest sustainable farmgate milk price.
With the co-op in a healthy state and the farmgate milk price heading towards $10, there’s renewed confidence among farmer shareholders. They can say Fonterra is in a strong position today and has a strong future.
Academic Dr Mike Joy and his employer, Victoria University of Wellington have apologised for his comments suggesting that dairy industry CEOs should be hanged for contributing towards nitrate poisoning of waterways.
Environment Southland's catchment improvement funding is once again available for innovative landowners in need of a boost to get their project going.
The team meeting at the Culverden Hotel was relaxed and open, despite being in the middle of calving when stress levels are at peak levels, especially in bitterly cold and wet conditions like today.
A comment by outspoken academic Dr Mike Joy suggesting that dairy industry leaders should be hanged for nitrate contamination of drinking/groundwater has enraged farmers.
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