Fonterra confident as TAF put to vote

17:00, Jun 21 2012

Fonterra is backing itself to win a mandate from shareholders when its proposed share trading scheme goes to the vote on Monday.

"A lot of time and effort has been spent on getting this right," Fonterra chairman Henry van der Heyden said.

Skilled advisers had assisted the board of directors and the Fonterra Shareholders' Council to design Trading Among Farmers (TAF).

"I have complete faith in the process we have been through."

Even though the resolution needs only 50 per cent shareholder support, he has already said Fonterra will proceed only if it gets a strong mandate.

BDO rural accounting specialist Mark Irving said based on the 89 per cent vote in 2010, Monday's vote will go through – albeit with a lower majority.


A 75 per cent majority is the normal threshold for a major Fonterra vote.

Mr Irving does not understand people's concerns that TAF will bring a loss of shareholder control and allow "townies" to influence the milk price.

He believed the issues had been well and truly debated and said Taranaki's dairy farmers wanted Fonterra to get on with TAF and make it happen.

"Fonterra has rattled out the big guns to shoot down the opposition and have done everything they can to get it through."

Taranaki-King Country MP and dairy farmer Shane Ardern would not discuss his vote because legislation allowing TAF to proceed was still before Parliament.

He urged shareholders to vote in what was the most important decision they faced since Fonterra was formed.

Those unsure about Fonterra's direction should select like-minded people to lead the company.

"If you feel you can't back your industry leadership, then you probably need to sack them," he said.

Taranaki's largest supplier of milk to Fonterra, Parininihi ki Waitotara Inc, (PKW) will support TAF.

Chief executive Dion Tuuta said PKW was comfortable the direction being taken by Fonterra's board of directors was right for the the co-operative's long-term growth. "Fonterra is a global co-operative and needs to find ways to grow so it remains competitive."

Fonterra Shareholders' Council former chairman and North Taranaki farmer Blue Read, who supports TAF, said safeguards would protect the integrity of the farm gate milk price and 100 per cent shareholder ownership and control. Money washing in and out of the balance sheet when shares were redeemed posed more risk than TAF.

New Zealand Dairy Woman of the Year Barbara Kuriger, of New Plymouth, will vote for TAF because she has confidence in the protections set up around TAF.

"What's good for the co-operative is good for shareholders. TAF can drive the success of the co-operative and we can all be winners."

Taranaki Federated Farmers president and dairy farmer Harvey Leach will vote for TAF because his concerns have been answered. "I'm more than happy with what I've heard at the meetings and with the information I've read."

Whenuakura dairy farmer Matt Honeyfield said TAF would allow the company to move forward. "You put your trust in the directors and the 80 per cent of the shareholders' council who support it. It doesn't seem that risky to me."

2010 Taranaki Sharemilkers of the Year Greg and Hannah Topless, who now own a dairy farm at Mahoe, near Stratford, have already cast their vote against TAF.

Mr Topless studied the information intensively and did not think TAF was the right direction for Fonterra.

He was worried about the consequences of a share price rise and doubted TAF would fix the co-operative's redemption risk.

TAF was complex and complicated and he believed shareholders who did not understand it should not support it.

South Taranaki dairy farmer and farm consultant Michael Joyce remains opposed to TAF. Nothing had been done or said to convince him to change his mind.

Mr Joyce said he was not anti-Fonterra and was heartened to hear Fonterra directors and the Fonterra Shareholders' Council respected the fact that people held different views. "Whatever your persuasion, get out and vote because it's important the board has as clear a mandate as possible."

Former Fonterra director Harry Bayliss, of New Plymouth, who will vote against TAF, doubts the directors and the shareholders' council have properly canvassed the issue of control of the shareholders' fund and the legal title to shares.

"Key risks have not been portrayed clearly. They've only been presented in a positive way."

He also thought communication between the company and shareholders was significantly below where it needed to be.

Hawera shareholder Tony Buist – sole dissenter to TAF at the satellite meeting in Hawera two years ago – remains opposed to TAF and expects it to be compromised pretty quickly if it's approved.

Deborah Clough, a candidate for the Stratford ward in last year's Fonterra Shareholders' Council elections, has already voted against TAF, but expects it to be approved.

"I still don't think outside investment will help Fonterra – it'll create too much conflict between the dividend and the milk price and it will increase rather than reduce redemption risk.

"We don't want outside investment. The dividend's our profit. If investors want a dividend, let them buy a farm and take the risk like we do."

Taranaki Daily News