Fonterra Trading Scheme

The milk company, Fonterra, is a co-operative of farmers. The dairy farmers who send their milk to Fonterra for processing, all own the company. Big farms have more shares than small farms. Two years ago, Fonterra introduced the idea of a Farmers Trading Scheme – TAF. Farmers could buy and sell shares to other farmers. Most farmers liked the idea but now they have another vote. This time, the vote includes another plan – to allow other people to buy units so they would earn dividends.

This is like buying shares in a company but the difference is that these investors would not be able to vote about anything the company wants to do. Also only 20% of the Fonterra shares, a maximum of $500m, will be for non-farmers. Investors would have no control over the company. It would still be 100% farmer control and ownership.

The reason for Fonterra’s plan is to raise more money for investing in dairy companies overseas.

One farmer said that allowing other people, people who are not farmers, to invest in the co-operative would lead to problems. Non-farmer investors might want higher dividends instead of paying farmers a good price for their milk.

The CEO of Fonterra said that there has to be a 75% majority of farmers voting for non-farmer investors.

About half of the 10,500 farmers have already voted online. On Monday morning, June 25th, meetings will be held in 8 locations around the country for the other farmers to vote in person. The results are expected later on Monday.

Listen to September 22nd 2011 to hear more about Fonterra.

Vocabulary

introduce – bring in a plan for farmers to think about
scheme – plan
co-operative, cooperative; co – together, working together; co-operate (v); co-operation (n)
non (prefix) – not
dividends – paid to shareholders when the company makes a profit
investors – people who buy shares in a company or put their money in a business






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