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Dairy Farmers Urged to Think Twice

Media Release

23 March 2006

Dairy Farmers Urged to Think Twice

New Zealand First is urging dairy farmers to exercise extreme caution before cashing up their farm equity in schemes such as that concocted by Dairy Investment Fund Limited (DIFL).

The offer from DIFL would allow dairy farmers to raise cash on their Fonterra shares. While farmers retain ownership and voting rights of the shares, DIFL receives the value-added component of Fonterra’s payout.

“The opportunity to unlock money tied up in Fonterra shares might sound good in theory, but I feel compelled to warn farmers that if something sounds too good to be true, it usually is,” said Primary Production spokesperson Doug Woolerton.

“The deal is similar to home equity mortgage schemes where owners can borrow against the value of their home without having to make repayments in their lifetime, or until they sell the property. The attraction of cash in the hand now can sometimes lead to later disappointment as equity disappears.

“I have grave concerns that farmers who trade their shares for cash will end up in a similar situation, with their farms being owned by a faceless and merciless investment company.

“There is also the disturbing possibility of black market share trading.

“For these reasons, I advise farmers to think very carefully before availing themselves of this offer,” said Mr Woolerton.


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