30 Apr 2012

Fonterra boss advocates outside investors

10:44 pm on 30 April 2012

Fonterra's chief executive has told MPs plans to allow outside investment into the dairy co-operative could help see off the threat of foreign ownership of New Zealand farms.

Theo Speirings says that investment will also allow the public to share in a future dairy boom.

Mr Speirings and chairman Sir Henry van der Heyden were questioned for two hours on Monday by MPs on the Parliament's Primary Production select committee considering legislation paving the way for Fonterra's controversial Trading Among Farmers (TAF) proposals.

Some $600 million paid out to redeem the shares of drought-hit farmers in 2008 was the driving force behind the TAF proposals at the heart of the Dairy Industry Restructuring Bill, which is making its way through Parliament.

The legislation paves the way for investors to take a stake in the co-operative's future profits.

Labour Party MPs say the bill could be used by investors to drive down farmers' milk payments.

But Theo Speirings believes it could boost Fonterra's investment overseas and lessen the need for foreign purchase of New Zealand farms to secure milk supply.

Mr Speirings says Fonterra has been criticised in the past for not sharing its windfalls from high international dairy prices, but allowing investment in profits would allow the public to share in a future boom.

Fresh vote on TAF scheme

In 2010 farmers voted overwhelmingly for the Trading Among Farmers scheme which enables them to trade shares between themselves, while also setting up a fund that allows outside investors to buy dividends of shares, but not voting rights.

Since then, some farmers have voiced concerns that it could lead to outside investors pressuring the co-operative to lower milk payments to drive up their own share of profits.

Fonterra announced last week that it would give its 10,500 farmer suppliers a fresh vote on the scheme on 25 June.