Historic vote by dairy farmers looms
Sun, 24 Jun 2012 12:15p.m.
Opinions remain strongly divided ahead of an historic vote by dairy farmers tomorrow that will shape the future of the biggest business in New Zealand, Fonterra.
Fonterra's 10,500 farmer owners are voting on a Trading Among Farmers scheme that allows dairy farmers to buy and sell shares in the co-operative among themselves, rather than to Fonterra.
Many have voted via mail ahead of meetings around the country tomorrow.
Former chief executive Craig Norgate says farmers will approve the proposal and there are risks to the future of Fonterra if they don't.
"It has been 10 years of constant debate around capital structure and that is holding the organisation back," he said on Q+A today.
"It has not delivered on what was promised a decade ago because it has not been able to make the investments that it needs to."
Critics say the proposal will take the co-operative's focus away from the price it pays farmers for their milk.
Former Federated Farmers' dairy chair Lachlan McKenzie does not think the plan will go ahead.
He said that under the proposal a percentage of the profits from Fonterra would flow to outside investors, rather than to farmers, and inevitably they would be investors from offshore.
"At the moment 100 percent of the milk price, 100 percent of profits, flow back to provincial New Zealand and it benefits New Zealand Inc. No other structure provides that benefit to New Zealand," he said.
Fonterra chief executive Theo Spierings has warned farmers that a no vote would not preserve the status quo as the risk Fonterra faced from current share redemption requirements was too great.
Fonterra would no longer be in charge of its own destiny if Trading Among Farmers did not proceed, he said.
Fonterra is responsible for about 30 percent of the world's dairy exports and is New Zealand's biggest company in revenue terms with annual turnover of $NZ19.91 billion.
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