Growing discontent over the way Fonterra is being governed gives a remit seeking to cement farmer representation on the board a good chance of being voted in, says Golden Bay shareholder Ann Jones.
Jones and former Federated Farmers dairy leader Lachlan McKenzie have put forward a resolution to next month's annual meeting seeking to amend the dairy giant's constitution so there is a minimum of nine farmer-elected directors on the 13-member board and that only farmer directors can elect the chairman.
The pair said their resolution simply sought to ensure continued 100 per cent farmer control and ownership of Fonterra, as promised by Fonterra leaders in shepherding the co-operative's debut on the sharemarket with a listed unit trust this month under share trading among farmers (TAF).
The board, itself dealing with internal division, has criticised them for presenting the resolution, saying it does not support the proposals and recommends shareholders vote against them.
"In addition, the board would like to register its disappointment that the co-operative's governance structure, philosophy and culture have not been followed in putting these proposals forward," it said in a notice to the NZX.
The Fonterra Shareholders Council, which represents the interests of Fonterra's 10,500 farmer-owners, also does not support the resolution, saying it pre-empts a governance and representation review under way at New Zealand's biggest company.
McKenzie said the notice comment was "the board trying to stifle debate".
"Part of the democratic process in a co-operative is active shareholder engagement and active debate. The board is criticising me instead of saying it is a good idea or not."
A response from Fonterra on exactly what the board was disappointed about was not immediately available.
The Fonterra board also said the McKenzie-Jones proposal pre-empts the review, and had "not been well thought through" and was not in the best interests of the co-operative.
The joint company-council review was started at least six months ago.
Jones, a former director of Tasman Milk who owns a dairy farm near Takaka with husband Brian, said the remit was supported by almost all farmers she had spoken to and she was confident it had a good chance of passing.
She said older shareholders in particular were worried about farmers losing control of the co-operative in the wake over the introduction of TAF, which was narrowly voted for in June after more than two years of often bitter debate.
There was "a lot of disquiet" which had surfaced at a meeting in Canterbury last week where chairman-elect John Wilson got a "roasting" from farmers for supporting former chairman Sir Henry van der Heyden's staying on the board, Jones said.
‘They basically said stop talking at us and sit down and listen."
It had also shown up in their low response to TAF, with just 260 farmers offering to sell the economic rights to their shares in Fonterra's proposed $525 million listed trust fund, she said.
Jones accused the shareholders council of failing to canvas farmers over the remit and of bowing to the influence of van der Heyden and the board, saying most South Island councillors had told her they supported the remit's intention but later changed their minds.
The council's suggestion that their resolution was pre-emptive or could cause practical difficulties was misleading and an affront to the democratic rights of farmers, she said.
McKenzie and Jones drew up their resolution with legal guidance after it was revealed last month that one option being considered in the governance review was to reduce farmer directors to eight and increase non-farmer appointed directors to five.
Jones, a critic of TAF, said under the present board structure, farmer directors could be outvoted if Wilson, van der Heyden and one other sided with the four independent directors.
Van der Heyden's claim that Fonterra would not attract a director "worth their salt" unless they could select a chairman was laughable, as it was common practice in co-operatives and around the world, she said.
Meanwhile, Wilson says he has "no idea" whether his chances of re-election as a director next month are being eroded amid claims of growing farmer unease about governance standards.
He is seeking re-election to the board along with fellow incumbent Nicola Shadbolt, and nine other farmer candidates vying for three board seats at New Zealand's biggest company.
Wilson, a Waikato farmer, was recently named by the board as successor to van der Heyden.
It is now widely known among shareholders of the farmer-owned co-operative that the vote was not unanimous and that not all Fonterra's nine farmer-elected directors supported Wilson.
The third vacancy in next month's election was created when farmer-director Colin Armer quit after Wilson was announced as chairman-elect.
Nelson Fonterra shareholders get the opportunity to meet and question the 11 candidates standing for the three vacant seats at Seifried Estate on December 6, part of a national tour they are doing.
Voting opens on November 26 and closes on December 15.