Irate Fonterra farmers ponder fresher fields
Andrea Fox
Fonterra’s farmer-owners are showing their frustration at being left in the dark about the company’s troubled $756 million investment in China’s Beingmate by threatening to stop milk supply.
In recent correspondence obtained by the Herald, the Fonterra Shareholders’ Council told farmers some shareholders were expressing their frustration by submitting milksupply cease notices.
Farmers supplying Fonterra have to buy shares in the cooperative, which also has units listed on the stock exchange. February is the time they advise Fonterra if they are supplying milk for another year.
The council had been meeting farmers considering leaving the co-operative, and some discussions had been “very robust”, it said.
Council chairman Duncan Coull would not be drawn on the correspondence: “We send out letters all the time.”
Pressed, he said there was always talk about cease notices at supply sign-up time.
Fonterra is our biggest dairy manufacturer and exporter, collecting 82 per cent of raw milk, but smaller rivals, which don’t require farmers to buy shares to supply milk, have gained market traction and are luring its farmers.
The correspondence from the council said Beingmate’s forecast earnings downgrade was concerning for all shareholders given significant investment in the business.
Councillors’ message to the board was that it had responsibility to provide clear communications to shareholders “and it should not be left to the media to fill the vacuum”.
Councillors were told shareholders would be updated on Beingmate when further information was available and when Fonterra announced its half-year results on March 21.
Fonterra bought an 18.8 per cent stake in the Beingmate Baby & Child company in 2015. The Chinese company’s financial performance had started sliding before that, according to financial and news reports.
Fonterra’s current unit price on the NZX is $5.95. The units were listed in 2012 at $5.50 and went straight to $6.66. They reached a high of $8.09 in May 2013.