With the amending bill to the Dairy Industry Restructuring Act (DIRA) completing its final parliamentary stage yesterday, Federated Farmers is warning Fonterra supplier-shareholders they need to actively back constitutional changes due in November.
“Some vital misses in the DIRA amending bill could bite Fonterra supplier shareholders if they go to sleep now,” warns Willy Leferink, Federated Farmers Dairy chair.
“First, a good and important amendment in the Bill is greater transparency over the farm gate milk price and the method in which it is set.
“The farm gate milk price sets the income for Fonterra suppliers and the price farmers have to pay in order to supply Fonterra. It is also sets the industry yardstick for other processors with their suppliers.
“With Trading Among Farmers or TAF now around the corner, I think potential investors in the Fonterra Shareholders Fund will welcome certainty. When it comes to the total milk payout, it is about knowing if the proportion of the dividend to the milk price is set correctly.
“Where Federated Farmers is genuinely disappointed, is the Government failing to put Fonterra’s preferred constitutional safeguards into statute. That leaves a sour taste.
“It would have shown bipartisanship to have worked with the Opposition to place statutory limits on the size of the shareholders fund, the number of units any farmer can place in the fund and the number of dividends any one investor can hold.
“Given the Government is bending over backwards over its mixed-ownership model for state assets, I would have thought this a wise step.
“The Government seems to have missed an opportunity to ease the concerns of a large chunk of Fonterra’s shareholding and that disappoints us at Federated Farmers. As it stands, we are seemingly in a holding pattern until Fonterra Cooperative Group’s November AGM and constitutional vote.
“But if farmers go to sleep now, they really risk invoking the 2010 ‘B’ constitution. This ‘B’ constitution sits there like some ghost of Christmases past and if it is ever implemented, it could open up Fonterra like a tin of sardines.
“This is why November’s second bite at the constitutional cherry needs a massive turnout to smash the 75 percent barrier needed.
“While Federated Farmers had a success over the ‘independent person’ in the amended DIRA, we are gutted the Government is still directing Fonterra to set its share price at fair value if TAF doesn’t eventuate.
“Fonterra should be allowed to set its share price as it sees fit, just like every other co-op does.
“With the amended DIRA now awaiting Royal Assent, our attention switches to consultation on the important Raw Milk Regulations,” Mr Leferink concluded.