Fonterra is the biggest company in New Zealand and also the biggest export dairy company in the world. It is a co-operative which means that farmers own it. In fact, 10, 500 dairy farmers in New Zealand own Fonterra. Each farmer has one share for each kg of milk solids that are sent to the dairy factory. Fonterra will pay $6.05 a kg for milk solids for the year 2009/2010. This is not the highest price ever paid but it is still very good, much better than Fonterra expected in September. However, most dairy farmers have to borrow money from the bank until they get their payout.
Fonterra wants to grow and needs more capital. The company asked the farmers if they wanted shares to be public. This would mean that other people, not farmers, could buy shares in Fonterra. The farmers said, “No”. Listen to Sept 5th 2009 for more information about this.
Then Fonterra offered farmers the chance to buy more shares. The offer closed last week. 3,461 farmers bought 60 million shares at $4.52 per share, and paid $270.7m in total. This is probably not enough money for Fonterra to grow. There is still a chance for farmers to buy shares later in the year but if Fonterra does not sell enough shares to farmers, the company will have to offer shares to the public.