Revamped Fonterra to be ‘more capital-efficient’
Fonterra chair Peter McBride says the divestment of Mainland Group is their last significant asset sale and signals the end of structural changes.
"The speed at which the DIRA Bill is being pushed through leaves us with little time," Donna Smit, Whakatane, told Rural News. "It has been forced upon us."
The petition will be presented at a primary production select committee hearing on proposed changes to the Dairy Industry Restructuring Act (DIRA). Public hearings start April 30.
The DIRA changes proposed by MAF lay the ground for the co-op to roll out TAF later this year. The bill is being fast-tracked by the Government; the primary production select committee will report finally by June 1.
Smit says visiting farmers one-by-one is time consuming and they need to "reach more people quicker."
One organiser Smith knows visited 40 farms out of which 37 farmers signed the petition. She's been to 15 farms of which 14 signed.
They have "well above" the 5% threshold required for a special
meeting, but are pushing for a second TAF vote because that's the petition wording.
Fonterra Shareholders Council chairman Simon Couper says the TAF process is progressing well with the board and the council still doing due diligence.
"We will ensure all preconditions are met and Fonterra farmers have 100% ownership and control. Farmers expect us to do that."
Couper acknowledges some farmers, including Smit, are calling for TAF without the shareholders' fund. The fund would allow farmers to cash in shares and exchange dividend rights – but not voting rights – with outside investors, through a unit trust custodian.
Couper points out the fund was envisaged when Fonterra farmers voted for TAF two years ago.
"The TAF model requires a liquid market for farmers to freely enter and exit. The fund is an essential part of the proposal."
But Smit's group feels the risks and ramifications of institutional investment were not fully explained at the time of the vote. She says it's difficult to see how 100% ownership and control can be maintained under the proposed TAF.
A possible solution is TAF without the shareholders' fund, she says.
"If Fonterra's national milk supply is up 10% and in 2011 we produced 1320 million kgMS, a 10% increase would be 132 million kgMS at a share price of $4.52/share.
"If each farm took up its entitlement, $596m would be 'washed into' Fonterra's balance sheet. The shareholders' fund was going to raise $500m. Once again the simplicity of the cooperative is at work; the suppliers could fund the strategy refresh. We don't need the shareholders' fund."
