9 Nov 2012

Labour MP's bill on Fonterra drawn from ballot

10:22 pm on 9 November 2012

Labour's primary industries spokesperson Damien O'Connor is making another attempt to impose a legislative limit on outside investment in Fonterra.

The MP is sponsoring a member's bill that will be considered by Parliament after it was drawn from the ballot.

It aims to ensure ownership and control of the dairy co-operative says in the hands of farmers by restricting the amount of outside investment in Fonterra's new shareholders fund to 20% of the value of the company.

The fund, now open for applications, will allow investors to buy the dividend rights to shares that farmers deposit in exchange for their cash value.

The limit on that fund is set in the co-op's constitution at 25% of its value, but farmers will vote on a resolution at next month's AGM to lower it to 20%.

Although the Fonterra board has already said it will operate at the lower limit, Mr O'Connor thinks it needs to be backed by law as well.

"We believe it's really important to have some legislative protections so that before any major change in shareholding or outside influencing occurs in Fonterra there's recourse back to Parliament, where consideration of that change can be made."

Mr O'Connor tried unsuccessfully to get the measure included in recently-passed dairy industry legislation and will make another attempt with his member's bill.