Fonterra dairy co-operative is warning of a black market developing for the dividends on its farmers' shares if its Trading Among Farmers (TAF) plan fails to allow the cooperative to hand off its liability for re-purchasing shares from farmers.
It wants farmers to be able to sell their unwanted shares to other members of the cooperative.
But it is also keen on providing a market where farmers could earn payments from investors buying access to the dividend flows of some of their shares, without relinquishing any voting rights. The dividend rights would go into a fund, which would then be available for investors to purchase as units in a secondary market.
A Fonterra executive, Alex Duncan, told Parliament's Primary Production Select Committee which is considering legislative changes that the proposals are essential to securing permanent capital for the co-operative.
Mr Duncan says a formal market for dividends could also be crucial for some farmers hit by an expected fall in income next season.
One worry was that an alternative market could develop if TAF can't be established and farmers face renewed financial pressure.
"Its better to have something that's explicit and under our control - we can control the terms - rather than for those sort of arrangements to emerge informally, which we think is a real risk," he says.