Fonterra to stay in farmers' hands

The Fonterra board listened to farmers and had no alternative but to enable them to retain control of their industry.
That's the view of Katikati dairy farmer Alan Williams after yesterday's overwhelming vote in support of changes to the co-operative's constitution and allow share trading among farmers.
"I'm not surprised at the result. In fact I predicted 90 per cent of farmers would be in favour," said Mr Williams who has more than 50 years of dairy farming experience.
Yesterday Fonterra received an 89.85 per cent vote in support of the changes which will no longer link share ownership strictly to production, and will enable farmers to trade shares between each other.
"Farmers didn't like Fonterra's earlier proposals on share holding. They wanted to retain control of the industry they have built," Mr Williams said.
Alan Law, a former president of Bay of Plenty Federated Farmers and a dairy farmer from Whakatane, also applauded the vote. "The voter turnout shows farmers have now re-engaged with the co-operative and they have given directors a clear mandate.
"In the past couple of years some farmers, particularly those with smaller herds, had felt they had no voice and didn't matter to Fonterra. However, they are a backbone of the industry.
"Big corporates may take their money out if things get tough but small farmers will stay on. Now they feel they are being listened to."
Fonterra chairman, Sir Henry van der Heyden said there had been a big voter turnout.
"Our farmers have voted in record numbers and those who voted represented 77.77 per cent of the Co-op's milk solids. I am delighted with this because, for me participation in the co-op is as important as the outcome, and it is something that the Board has made a priority.
"It is great to see farmers taking part and having their say. Their participation is the strongest since Fonterra was formed. It signals a clear mandate and shows that the unity and spirit of our co-op is alive and well," he said.
Sir Henry said Trading Among Farmers, where farmers buy and sell shares from each other through a market rather than the co-operative, would remove redemption risk - the need for Fonterra to pay cash out to those farmers leaving or reducing milk supply.
"This will stop money washing in and out of Fonterra's balance sheet from season to season, and provide permanent capital to grow returns.
"Trading Among Farmers will ensure Fonterra remains farmer controlled and owned, and that our loyal shareholders have an incentive to hold Fonterra shares and put more equity into our co-op," Sir Henry said.
Fonterra chief executive, Andrew Ferrier, said with permanent capital Fonterra would be better-placed to take the long-term business and investment decisions to shape the co-operative's ongoing success.
Mr Ferrier said Fonterra was "in a great place" with its reputation globally as a leading dairy provider, a strong business footprint, and brand presence in the world's fastest-growing dairy markets.
"Effectively our vote today for Trading Among Farmers will, together with the co-op's new retention policy, take capital structure off the table for the foreseeable future."