‘Really constructive discussions’: Farmer feedback flows at Fonterra meetings

Fonterra's Andy Macfarlane said the Lactalis deal was top of mind for many farmers.

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Voting for Fonterra’s divestment opens on October 7, so the co-op’s Board and Management have been on the road answering any questions that farmers may have about the $4.22 billion deal with Lactalis.

Andy Macfarlane, a farmer-elected director at Fonterra, has been part of that team, working his way down the South Island from Nelson to Timaru.

While Fonterra announced another strong performance last week, Macfarlane said the Lactalis deal was top of mind for many farmers.

“From my perspective, I’d say 90% of the questions are coming around divestment,” he told The Country Spot Breakfast’s Brian Kelly.

Macfarlane said there was a high turnout at the meetings, with many farmers wanting to understand the reasons behind the sale, and why French dairy giant Lactalis was a good choice.

“The engagement level’s really good, which is the number one thing you want.”

He said he relished the opportunity to talk with farmers and hear their feedback, whether positive or negative.

“I love this process of sharing results and fielding questions with the farmers.

“It keeps you honest.”

Macfarlane said farmers wanted to know more about Lactalis and what Fonterra would look like without the Mainland brand.

There was also interest in the financial aspects of the deal

“We’ve also had a few questions about the $4.22 billion,” he said.

“We’re paying out $3.2 billion to shareholders - what are we doing with the other billion?

“The answer there is that we’ll have a very strong, low-risk balance sheet, but it gives us room for future investment in these projects [with] a high return on capital.”

Macfarlane said that post-divestment, Fonterra would be more streamlined, focused on what it does best in the B2B space through high-value Ingredients and Foodservice products.

“We are moving to a slightly simpler, leaner business with a lower risk profile with something that we can drive a high return on capital, which is what we feel farmers need to be the owner of the business.”

When they weren’t discussing the consumer divestment, Macfarlane said three big topics kept coming up: the breakdown of the business, risk management, and understanding what makes Fonterra’s largest customers tick.

With FY25 being one of Fonterra’s strongest performances in terms of shareholder returns — a 57 cents dividend and a $10.16 milk price — Macfarlane said farmers had their eyes on the future.

“With a good milk price and good earnings, it’s a very sort of forward-looking discussion this year.”

Overall, he said the meetings had been a positive experience.

“Really constructive discussions going on, which is why we go on the road - that’s our core business.”

Fonterra encourages farmers to continue discussing their views, ask questions and vote.

Voting opens Tuesday, October 7.