ANDREA FOX.Proposed reform of the law governing Fonterra and the dairy industry will open «the sale of the century» overseas that investors have been waiting for, a parliamentary select committee has heard.South Canterbury dairy farmer Leonie Guiney, representing 735 dairy farming businesses, told yesterday’s primary production committee that the Dairy Industry Restructuring Act (DIRA) Amendment Bill’s provisions for Trading Among Farmers (TAF) within Fonterra would enable overseas institutional investors to form «highly organised, well-funded lobby groups and inevitably exert downward pressure on milk price â€“ for dividend and share appreciation».
It was the first day of hearings of some of the 800 public submissions on the bill to enable reforms of the 11-year-old DIRA.
But Fonterra chairman Sir Henry van der Heyden told the committee the bill was «crucial to Fonterra and to New Zealand».
The bill would position New Zealand’s biggest company to introduce TAF, which would enable it to «remain the national champion of our farmer shareholders and which New Zealand needs», he said.
TAF would remove Fonterra’s current obligation to trade shares with its suppliers, switching the trading onus to them.
It is being promoted by Fonterra as the means to provide a stable permanent capital base from which the farmer-owned co-operative can pursue its global growth strategy.
TAF involves offering sharemarket investors dividend-carrying, listed units in Fonterra’s co-operatively-held shares.
Growing farmer fears that TAF will open the door to sharemarket investors taking over the company has forced directors to agree to another vote on TAF.
Fonterra collects and processes 90 per cent of New Zealand’s raw milk.
As a result it sets the price of all milk in this country.
«Independent» processors Synlait, Open Country and Miraka jointly addressed the select committee.
Central to the trio’s submission is the claimed «dramatic negative effect» of Fonterra’s «artificially high» farmgate milk price on the industry.
– Â© Fairfax NZ News