Farmers fight for fair price

By PHILIPPA STEVENSON Agricultural Editor

Dairy minnows Tatua and Westland, which own shares in the former Dairy Board, say their shares have been valued too cheaply in the process of setting up Fonterra.

Both seek arbitration to redress the balance.

Fonterra, which stands to lose out from any upward revaluation, is also seeking arbitration because it says the valuation is excessive.

The Minister of Agriculture appointed Macquarie Bank to value the board, whose assets pass to its remaining shareholders and Fonterra following the mega co-op's formation.

Macquarie Bank valued the board's more than 988 million shares at $3.51 each, and last year the board made a distribution which has left a balance of $3.31 a share to be paid out to the independent companies. The number of shares stems from each company's milksolids production.

Tatua chairman Alan Frampton, whose company stands to get $26 million at the present valuation, said his board had called for arbitration to review the Macquarie valuation.

The company would take the money at the present valuation, which would include interest earned since last June 1, and trust that arbitration meant it would get more rather than force it to make a refund, Dr Frampton said.

Westland chairman Ian Robb said his long experience with the board suggested that it was worth more than Macquarie's valuation.

Westland stood to get around $84 million at the present valuation and had also called on the board to invoke arbitration procedures.

The payment to the two small independents comes at the expense of Fonterra, but there was no ill feeling among the farmers of the different companies over the valuation process, he said.

"Farmers want it all to be fair and equitable after all their contributions over the years," Mr Robb said.

"That's all Westland is asking for. Nobody wants to be paid less than they deserve."

Fonterra chief financial officer Graham Stuart said Macquarie had "overcooked the valuation".

"They've come up with a number [and] we think it is high," he said.

Three arbitrators will decide the matter, one nominated by Tatua and Westland, and one by Fonterra. Those two will appoint a third.

The companies have yet to decide what form the arbitration will take.

Mr Stuart expected the arbitration to begin around the end of next month and take "a matter of months."

One other tiny company, the Southland-based NZ Premier Dairy Co-op, has around 6500 shares in the board worth around $21,500.

Owner Bill Muller, who supplies Fonterra after a feta cheese export business failed, said that he hoped to convert his shares to a stake in Fonterra.