And the fallout from Fonterra’s latest financial results – which will see farmers take another paycut – has even turned cocky against cocky.
The dairy giant announced on Friday it would maintain a low payout, and cut farmer dividends – contrary to past messaging in which farmers were assured low payout years would mean high dividends.
That was enough to make Federated Farmers Waikato dairy chairperson, Craig Littin, seriously eye up switching to supplying other companies.
He said the decision wasn’t «related to just payout».
«We’ve been sticking with a big co-operative which has been sold to us as being the way to go, and I guess it’s time to front up really, and tell us why we should be staying».
The forecast 5 cent dividend cut to 20-30 cents per share will see farmers pay more interest on bank borrowings taken to buy the shares, than they will earn from the investment. That leaves them scrambling to make up the difference in a low payout year in which production was also battered by a dry summer.
Dave Robertson, a Waikato farmer famed for his profitability, has registered interest to supply Open Country Dairy, the country’s second-biggest milk processor and powders exporter. Robertson said he was «over it» with Fonterra.
«I don’t believe what they are saying anymore. They’ve lost all focus.
«The company is not owned by farmers, it’s totally lost touch.»
Waikato University professor of Agribusiness, Jacqueline Rowarth, owns Fonterra shares and said its Hamilton shareholder meeting yesterday was heated.
«There were lots of challenges about why should we stay with Fonterra when we’ve been persuaded to put in on average $1 millon-worth into shares and we’re less in terms of dividend than we’re borrowing the money at.»
Rowarth said farmers «are questioning whether Fonterra is actually operating as a co-operative anymore, and that’s dire. That’s abysmal».
Many were «looking for different options. They’re hoping that Open Country Dairy does build a plant at Horotiu».
«That’s sad, I think. Very, very sad.»
But while they shared in the anger over Fonterra’s dividend cut, other farmers warned against pulling out of the co-operative.
Ohaupo dairy farmer Stephen Fullerton agreed it was time to put pressure on Fonterra, but had no intention of switching companies.
He had been chased by Open Country Cheese for «five or six years» but would stay put because «Fonterra is our industry».
Fullerton knew of other farmers who had gone to privately owned companies, and said he wasn’t impressed.
«You’ve actually just robbed me.»
Former Fonterra board member Jim van der Poel also warned against a «knee-jerk reaction», saying pulling out of the co-operative «holds the potential for a lot of value destruction».
«I come from a principled point of view . . . where farmers sticking together and being a strong co-operative is our best chance for the future,» he said.
Fonterra board chairman, John Wilson, did not return calls on the shareholder meetings, and the company’s media team said he was «unavailable».
Waikato shareholder council members – and chairman Ian Brown – did not return calls by deadline, except for Matamata councillor, Grant Wills.
He said the feeling among farmers was «not great» and conversations around a switch had increased since the dividend announcement.
Fonterra’s media team this week published a written statement on farmer dissatisfaction, saying:
«The incentive of co-operative membership lies in our collective strength, and our strategy and ability to generate the best returns on a sustainable basis long term.
«Milk growth is fundamental to that. We really value the milk from New Zealand farmers and we are out to secure it.»
Source: Stuff