Fonterra is planning a new fund to invest in farms and has begun talks with potential investors.
The trust would be a partner that would invest in farming operations through a minority stake.
Council chairman Ian Brown said the trust could be particularly helpful to young farmers wanting to buy their first farm. Established farmers wanting to buy the next-door property and those involved in equity farming partnerships could also find it useful, he said.
Whatever the type of farming operation, it would have to be profitable, and profitable enough, to have the ability to buy the trust out at some point, Brown said.
«The balance sheet between Fonterra and farmers is linked. We need profitable farmers.»
Fonterra chief financial officer Lukas Paravicini has said the aim of the trust was to provide greater financial flexibility for Fonterra’s farmers and support sustainable milk production by efficiently funding dairy farming in New Zealand and Australia.
When asked if the proposal might be seen negatively by Fonterra farmers as another avenue for outsiders to invest in their big co-operative, following on from the controversial sharemarket listing of units in Fonterra shares, Brown said he could understand how people might fear this.
But realistically the banks were probably already the biggest shareholders in Fonterra through farmers’ balance sheets, he said.
Mitigation of any risk of outside investor control was another reason that farming operations using the fund must be profitable.