By LIAM DANN
Dairy farmers will finally get to have their say on the future capital structure of Fonterra later this month.
A nationwide series of 72 farmer meetings will begin on September 13.
Fonterra - a co-operative company - plans to canvas the opinions of its farmer shareholders before embarking on a
process which could see changes to its capital structure.
Some farmers have concerns about the rising value of the Fonterra share price relative to the payouts they receive for producing milk.
They say it is better for more capital to be returned directly to farmers rather than being held by the company to reinvest in global expansion.
Others believe it is vital for Fonterra to invest in its global brand business but that the present capital structure may be holding that back.
There is general agreement in the industry that the capital structure issue is one of the most important Fonterra has faced since it was created nearly four years ago.
Fonterra chairman Henry van der Heyden has said there are three pillars to Fonterra's structure which will not change.
They are: that Fonterra remains a farmer owned co-operative, that it continues to be the lowest-cost mass producer of dairy products in the world and that it continues to expand its value-added business.
Another capital structure issue likely to be on the agenda is reform of the complex "peak notes" system. The system requires farmers to buy "peak notes" to reflect the varying cost of processing milk at different times of the season.
Talks between Fonterra directors and the Shareholders' Council are already under way. Council chairman John Monaghan has said there is appetite for some change but that it will be an evolutionary process rather than revolutionary.
Fonterra has not set a deadline for the debate.
* The council yesterday re-appointed ratings agency Standard & Poor's (S&P) as Fonterra's valuer for the 2005-2006 season. Because Fonterra shares are not traded on market, S&P values them independently and provides a fair value range to the Fonterra board, which sets the price of the shares for each season.
