12 September 2011

2 minute read

Oceania

"There's a fiction that ‘mum and dad' investors would become share collectors rather than share sellers," says Willy Leferink, Federated Farmers Dairy chairperson.

"Federated Farmers backs the Fonterra Shareholders Council's call that Fonterra must remain a 100 per cent farmer owned and controlled cooperative.

"Another fiction is that Fonterra would prosper if it was listed. I am stunned by that suggestion because Fonterra is not just respected internationally, it is ranked the world's number one milk processor.

"If Fonterra was publicly listed, within a decade it would go down the same path trod by Nufarm and Lion Nathan. Most recently, Independent Liquor and Charles have joined 42 Below in foreign ownership. Perhaps Exhibit A is GlaxoSmithKlein; the Glaxo starting in Bunnythorpe.

"There's a good reason why cooperatives work with farmers because cooperatives create a shared culture and Westland and Tatua are two more significant farmer-owned dairy cooperatives. Even the three Foodstuffs are cooperatives that if combined, would easily be New Zealand's second largest company.

"It's to the credit of Fonterra's owners that they've seen through thirty pieces of silver in return for ‘stagging' their shareholding.

"Farmers need only look across the Tasman to see what a non-cooperative future would be like. In Australia, Japanese and Italian companies dominate fresh milk processing and the farmers there aren't happy about being pawns in the current supermarket ‘milk war'.

"My vision for a globalised Fonterra isn't actually much different those who back a listing.

"The exceptions being that Fonterra's head office is still in New Zealand, it is still owned by dairy farmers and these farmers still get up a 4am to milk. Having skin in the game keeps you grounded and farmer ownership has aided rather than impeded innovation.

"Federated Farmers pushed hard for Fonterra to retain more of the payout in order to grow the business. Not only is debt falling but these retentions have helped Fonterra expand. A recent example is its joint venture with another cooperative to grow pharmaceutical milk products.

"Fonterra also has beachheads in China and Brazil with India on the horizon. If correctly developed and positioned these give ‘NZ Inc' genuine access inside tomorrow's countries. Global expansion is how Fonterra will really grow.

"Being a Fonterra supplier, the sign outside my home farm states, ‘it starts right here'. Perhaps we need to add one more word making it, ‘the future starts right here'," Mr Leferink concluded.

The full opinion editorial is available on Idealog.

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