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Survey Results Strong Signal To Fonterra

22 May 2006
Survey Results Strong Signal To Fonterra

Sharemilkers want the ability to buy shares in Fonterra Co-operative Group, according to a survey by Federated Farmers of New Zealand (Inc).

The poll of 338 dairy members of Federated Farmers found that 96 percent of sharemilker respondents wanted the option to buy Fonterra shares, and 64 percent of sharemilker employers agreed.

The survey adds to pressure on Fonterra to enact Part 2, Section 160, of the Dairy Industry Restructuring Act 2001, which allows herd-owning sharemilkers the facility to purchase Fonterra fair value shares. Currently, only farm owners can buy shares in the co-operative.

“Fonterra has had the legal ability to sell shares to sharemilkers for the past five years. But it hasn’t done so,” said Dean Bailey, chair of the sharemilkers’ section of Federated Farmers of New Zealand.

“The ability to buy shares is a natural progression for most sharemilkers so we want Fonterra to give this urgent attention.

“The change will also provide the opportunity for farm owners to release capital through selling shares without taking the farm out of dairying, which is happening at the moment.

“Sharemilkers have always been the innovators in the industry and this would give them another tool to drive productivity.

“Federated Farmers has been working with Fonterra to progress this issue, and will continue to do so until there is a satisfactory outcome for sharemilkers, sharemilker employers, and Fonterra,” Mr Bailey said.

Sharemilker employers support sharemilkers owning shares, when both parties agree to the ownership of shares by the sharemilker.


Sharemilker Shareholding and Representation on Fonterra Shareholders Council

Following are the results from a Federated Farmers survey of Dairy Farmers of New Zealand members and sharemilkers’ section members.

Total number of DFNZ respondents: 203, of which 147 employed sharemilkers and went on to complete the full survey.
99% of DFNZ respondents who employed sharemilkers were Fonterra suppliers.

Total number of sharemilker section respondents: 135, of which 121 were 50:50 sharemilkers and went on to complete the full survey.

The general comments section incorporates comments from all respondents.

Do you consider that herd-owning sharemilkers should have the option to purchase Fonterra shares?
Sharemilker employers 66 % 33 %
Sharemilkers 96 % 4 %

Do you consider that herd-owning sharemilkers should be able to stand for election to the Fonterra Shareholders Council?
Sharemilker employers 64 % 36 %
Sharemilkers 95 % 5 %

If it were possible to transfer Fonterra shares to a herd-owning sharemilker who is engaged on your farm would you do this:
As soon as possible 8%
May in the future 58%
Never 34%

Would you be interested in purchasing Fonterra Shares if they were available? YES NO
87% 13%

Would purchase of Fonterra shares be a viable option for you in the next three seasons if available? YES NO
84% 16%

Do you consider that the current lack of options for sharemilkers to purchase Fonterra shares:
Limits your farm production 1%
Has the potential to limit your farm production 26%
Has no effect on your farm production 73%

Do you consider that the current lack of options for sharemilkers to purchase Fonterra shares:
Limits my production 1%
Has the potential to limit my production 46%
Has no effect on my production 53%

Do you consider that ownership of Fonterra shares should be included in the sharemilking agreement as an option?
Sharemilker employers 83% 17%
Sharemilkers 58% 42%


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