A major new study will question if Fonterra's farmer-shareholders are better off as a result of the company's creation nearly 17 years ago and how well it has allocated its capital.
The work is being commissioned by the Fonterra Shareholders Council in a bid to restore confidence among Fonterra's 10,000 farmer-owners, which has been knocked by questions about the cooperative's financial performance and overseas investment issues, particularly in China.
The council, comprising 25 farmer-elected representatives and charged with policing farmer-shareholder interests, was drawing up terms of reference, commissioning professional analysis and intended the work to be completed this financial year, said chairman Duncan Coull.
"These questions need to be answered and farmers need confidence that capital is being put to good use and that value is being created for them.
"We monitor the performance of the business on an annual basis ... there's been all these discussions in the farming base about the value it represents for us as farmers and there's been a number of iterations, so to move forward we need to do this big piece work," Coull said.
"There are unanswered questions and if we can answer them in a straightforward way, and if that is part of the reset of the cooperative, that's got to be a positive."
Fonterra was created from an industry merger under enabling legislation in 2001. At the time it had 96 per cent of the country's raw milk market. Today competition from emerging privately-owned companies had reduced that to 82 per cent.
Coull revealed the study when questioned by the Herald about the council's view of the heavy losses, which some observers have called "wealth destruction", that Fonterra has taken on its China investments.
Fonterra spent about $755 million buying a 18.8 per cent stake in China's Beingmate baby nutrition company, and has developed big dairy farms in China which have so far been unprofitable.
Coull said the farms "aren't going anywhere".
"The question that needs to be asked is where are we today relative to when we were formed  and how much better off are farmers as a consequence. That's the nub of the issue."
Coull said the study would also look at where Fonterra, New Zealand's biggest company by revenue, had allocated its capital and how well it had put it to use.
"It's not as simple as looking at a balance sheet of Fonterra and drawing some conclusions."
He said Fonterra's share value was never going to be a true reflection of the value of the company.
"Only a very small percentage of the total enterprise value of the business is actually liquid. And then you take farm investments over time. There's a whole piece of work has to go into this and those questions need to be answered. "
Coull said there was a lot of discussion in the shareholder base about the value Fonterra offered and many interpretations as well as misinformation.