Opposition to bill surprises Spierings
Fonterra chief executive Theo Spierings says he was "surprised" by a strong statement from the Fonterra Shareholder Council that it could not support the Government's proposed dairy industry restructuring legislation – but it should not affect the company's share trading introduction plans.
The Dairy Restructuring Amendment Bill, which had its first reading in Parliament yesterday, provides for, among other reforms, New Zealand's biggest company to introduce share trading among its farmers (TAF).
Last week the normally reserved shareholder council, which speaks for Fonterra's 10,500 farmers, said that "hidden" in the bill were provisions about the setting of a milk price that over time risked "disintegrating" the country's biggest and most important export industry.
While the council's message was not new, its language, including a hint of farmer protest action at Parliament, was unusually strident. It also suggested that Fonterra, a farmer co-operative, might face a tougher challenge than it anticipated getting its share-trading proposal past the shareholder watchdog.
Spierings agreed the council's statement was "a bit of a surprise". He suggested it sparked a special meeting of the council later.
"I don't believe it will have a serious impact on the total construct [of the bill] but for me the question is how these things are happening and how we are running our governance."
The Dairy Industry Restructuring Act 2001 was the trade-off for the creation of Fonterra by a huge industry merger.
A decade later Fonterra still controls 90 per cent of raw milk and by default sets the national price of milk.
The bill contains measures to make Fonterra's milk-price setting more transparent, including a milk-price monitoring regime by the Commerce Commission.