Fonterra's farmers will vote next week on a raft of changes to the way the co-operative is governed, including reducing the board's size to 11 from 13 members, and indications are that it will be a close run thing.

A special meeting in Hamilton on June 10 will consider the changes, which will include a shift in emphasis from outright voting for candidates to one of ratification of candidates put up by a selection panel. It will also mean removal of the current single transferable vote system (STV).

It was clear from Fonterra's annual meeting last year that there was an appetite for change, but farmers who attended 400 or so meetings nationwide to discuss the changes, are taking a cautious approach to what has been put before them.

"I think that it will be an extremely close run thing, and I think it will be a high hurdle to jump through, to be blunt," said Federated Farmers dairy chairman Andrew Hoggard.


He said the shift in emphasis from one of voting for candidates to one of ratification of a pre-selected candidates was at the centre of farmer concerns. "It's gone from a vote in the traditional sense to a ratification vote, so that is what has got people upset," Hoggard said.

"There are a lot of people that like the fact they get to choose the candidates," he said. "It will be bloody close and I would not like to guess which way it goes, but I don't think that it's a given that it will pass."

As it stands, a candidate can get on the board with 25 per cent support, whereas the new system means candidates will need to achieve 50 per cent support.

In response to farmer feedback, the initial proposal of six farmer directors has been increased to seven, the remainder being four independent directors.

Members of an independent panel formed to look into proposed changes to Fonterra's governance had differing views over aspects the proposals, but were unanimous in their endorsement of the entire package, said the panel's chairman Chris Moller.

He acknowledged that this voting element of the proposed changes had caused some controversy.

"There is a bit of a view out there this is somehow anti-co-operative ... I still believe that a yes/no vote is entirely democratic," he said.

Moller, a previous senior executive of the New Zealand Dairy Board and an inaugural deputy chief executive of Fonterra, is a former chief executive of the NZ Rugby Union and chairman of New Zealand Cricket.


Other members of the panel are Dame Therese Walsh, who is a director of ASB Bank, NZX and TVNZ, and co-operative experts Dr Adrie Zwanenberg from the Netherlands and Dr Michael Cook from the United States.

Moller said the New Zealand members of the panel favoured a smaller board while the foreign members favoured a bigger board, but that the proposals, overall, had the panel's support.

"It is a process that will, in my view, get the best people for the job of being directors of Fonterra," Moller told the Herald.

"The current process - the Candidate Assessment Panel - which I have sat on in the past, is, in our view, not working well. It's not getting as good a people as a company the size of Fonterra needs to get."

Moller said that with so much at stake at Fonterra - a company responsible for about 20 per cent of New Zealand's export receipts - "they need the best possible people to be on the board".

He said the current system lacked confidentiality for candidates, which had acted as a disincentive for potential candidates to put their names forward.

Moller said there was "no silver bullet" on the question of board numbers.

"But in my view, this is a good step in the right direction."