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Plans by Fonterra to list on the stock market have hit a stumbling block with the dairy giant abandoning a vote by shareholders to approve radical changes.
Chairman Henry van der Heyden said in a letter to farmers that the first vote on a capital restructure process - expected in May - had been cancelled.
"We can see that there are misunderstandings and some misinformation about the Board's preferred capital structure proposal, particularly on the critical question of how it will impact on your payout," van der Heyden said.
In November farmer co-operative Fonterra announced its preferred option for a capital restructure which would create a new company to own all the assets of the existing co-operative.
The new company would be listed on the stock exchange with the co-operative retaining an initial 65 per cent holding, 15 per cent going to farmers and 20 per cent to the wider public.
Two votes had been expected as part of the process - one in May to create the two entity structure and another in 2010 to decide on listing.
"While the May vote won't go ahead, it is vital that we continue the consultation process and continue to discuss the issues that are concerning you and your board," van der Heyden said.
Fonterra had received good feedback on the proposed capital re-structure "and it is very clear that we will need to spend much more time in consultation and discussion before any final deciding vote in 2010".
Fonterra corporate communications director Graeme McMillan told NZPA news media speculation that the capital restructuring was "dead in the water" was incorrect.
"They've asked for more time," he said.
Mr van der Heyden said most farmers wanted more time to understand the long-term implications.
"It's a complex subject with far-reaching implications," he said.
Fonterra, New Zealand's largest company, wants to split into a milk-supply co-operative and an operational subsidiary and list about 35 per cent of its shares on the NZX so it can raise capital through outside investors for overseas investments.
The co-operative's nearly 1.28 billion shares - estimated to be worth $6.79 each - mean it would have a market capitalisation of $8.7b if floated today.
The company controls nearly 40 per cent of the global trade in dairy exports, and assets of $12.6b and revenue of $13.9b mean it would dwarf the present biggest company on the NZX, Telecom.
But some farmers have struggled to accept that the outside investment will create a tension between achieving the lowest possible price for raw material - their milk - to boost margins and dividends, and their own ambition to continue receiving the highest possible milk price.
"It is around: how do you split the milk price versus dividend," said Mr McMillan. "It's the profit of the listed company versus the price they pay for milk."
Other farmers have expressed concern that the co-operative's directors will be able to dilute their initial 65 per cent stake in the listed subsidiary to just above 50 per cent, without further consulting farmers.
The company planned to press ahead with changes it planned to make to its milk pricing - something it said has to be addressed regardless of any change to capital structure.
Mr van der Heyden said there was also some confusion about the milk price mechanism being caught up in the debate over capital structure.
It will be canvassed at a week of farmer meeting starting on March 6 - at which the company will also outline how the cooperative shares would be changed under its preferred option for capital restructuring.
"While the May vote won't go ahead, it is vital that we continue the consultation process," Mr van der Heyden said.
- additional reporting by NZPA
