Potential damage to Fonterra’s brand and reputation overseas has prompted leaders of the dairy giant to agree to giving its farmer-shareholders another vote on the controversial share trading among farmers proposal.
Chairman Sir Henry van der Heyden told Fairfax that questions from the Asian market about discontent about TAF (trading among farmers) from «a minority of shareholders» was a dominating theme during this month’s visit by him and chief executive Theo Spierings to China, Hong Kong, Indonesia and Singapore.
«Everyone wanted to talk about it – customers, joint venture partners, future partners, staff. We need to get unity back in the cooperative. We have to bring this to resolution,» van der Heyden said.
Though the chairman insists opposition to TAF is confined to a minority of the farmer-owned company’s 10,000 shareholders, they have been extremely vocal in the past six months in their calls for a second vote on the 2010 proposal to introduce share trading among farmers.
«There’s no doubt the majority of our farmers are telling us to get on with it.»
Van der Heyden, who stands down at the end of this year, said he was totally confident farmers would support TAF again.
«Our reputation and brand is the defining issue here. It’s the uncertainty that’s damaging. We stand for quality, we always do what is right – people are asking ‘what’s going on in the family?»
Opposition, stemming from a fear that by introducing share trading, farmers will lose 100 per cent control and ownership of New Zealand’s biggest company, has been strongest in the South Island but spread this year to Taranaki, Bay of Plenty and Northland.
Fonterra farmers voted in the concept in 2010, but some have got cold feet in the delay implementing it.
However calls for a second vote have not been heeded by the board, which has been adamant it had to finish a process, including due diligence, on the scheme, which is designed to end Fonterra’s obligation to buy and sell shares to and from its farmers.
The board says transferring the onus to farmers for share trading among themselves would give the company permanent capital to pursue its growth strategy.
TAF involves offering the public dividend-carrying units in Fonterra shares. These would be listed on the NZX and the process for implementing share trading is well advanced, with enabling legislation in Parliament and sharemarket advisors appointed.
Fonterra wants to introduce TAF in November.
The special meeting of shareholders is scheduled for June 25.
Ad Feedback
The voting resolution has yet to be formalised, van der Heyden said.
The Fonterra board will sign off on its due diligence on TAF next month. It is not yet known what percentage of shareholders will have to support TAF this vote, which van der Heyden is calling a «final vote».
Federated Farmers called for Fonterra to allow another vote on TAF in February.
Vice-chairperson of the federation’s dairy arm Andrew Hoggard said today’s announcement is a good decision.
«We can’t have a divided co-op.»
Hoggard supported van der Heyden’s claim that there is majority support for TAF.
«But there was a great deal of confusion and angst among some farmers – and growing.»
«This way we know it’s going ahead on a solid basis.»
Simon Couper, chairman of watchdog the Fonterra Shareholders Council, said the company’s strength is working together.
«It’s clear the co-op needs to go forward together in one direction. It’s been hard seeing the feeling (among some shareholders). Our strength is working together – not against each other.»
– © Fairfax NZ News
http://www.stuff.co.nz/business/farming/6792762/Fonterra-allows-second-vote