"Our" business?
OPINION: One particular bone the Hound has been gnawing on for years now is how the chattering classes want it both ways when it comes to the success of NZ's dairy industry.
Farmers are flabbergasted to learn that Fonterra borrowed money to pay dividends over the last few years.
A Fonterra supplier meeting at Matamata heard that the board has now changed this policy: future dividends shouldn’t require the co-op taking on more debt.
Federated Farmers Waikato president Andrew McGiven says it’s hard to fathom why this was done.
“Maybe it was pressure to hit numbers for performance incentives,” he told Rural News.
McGiven says for many farmers the worst business practice is to pay a perceived profit from debt.
“It was interesting and alarming, to say the least, how over the last few years that dividend was paid: it was essentially borrowed money to pay these.
“The directors present [at the meeting] put up their hands to say this has now stopped and the company now needs to focus on making cash profits while decreasing debt.”
The Matamata meeting was attended by directors Leonie Guiney and Andy Macfarlane.
In 2015, Fonterra paid 25c dividend, in 2016 40c, in 2017 40c, and in 2018 10c.
This year the co-op did not pay a dividend after posting a $605 million loss, mostly via writedowns of assets to the tune of $826m.
A Fonterra spokeswoman told Rural News that in past years its dividend “was funded through debt at times”.
This approach has now changed, she says.
“Previously, the dividend policy included the consideration of near term earnings projections, investment priorities, gearing targets and existing or likely market conditions that may impact Fonterra or our shareholders.
“Our new dividend policy guidelines state that the payment of a dividend should not require our co-op to take on more debt or reduce our co-op’s ability to service existing debt.”
Last month, Fonterra also announced a change in strategy, moving away from supplementary global milk pools to a NZ-based milk pool.
Fonterra chairman John Monaghan says the new strategy sounds simple and the best strategies often are.
“Simplicity shouldn’t be confused with a lack of ambition,” he said.
Fonterra’s earnings range forecast for 2019-20 starts at 15-25 cents/share. The five year plan is to achieve a target of 50c/share.
According to the most recent Rabobank Rural Confidence Survey, farmer confidence has inched higher, reaching its second highest reading in the last decade.
From 1 October, new livestock movement restrictions will be introduced in parts of Central Otago dealing with infected possums spreading bovine TB to livestock.
Phoebe Scherer, a technical manager from the Bay of Plenty, has won the 2025 Young Grower of the Year national title.
The Fencing Contractors Association of New Zealand (FCANZ) celebrated the best of the best at the 2025 Fencing Industry Awards, providing the opportunity to honour both rising talent and industry stalwarts.
Award-winning boutique cheese company, Cranky Goat Ltd has gone into voluntary liquidation.
As an independent review of the National Pest Management Plan for TB finds the goal of complete eradication by 2055 is still valide, feedback is being sought on how to finish the job.
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