Hon David Carter
Minister of Agriculture

18 September 2009 Media Statement
Government welcomes progress on Fonterra capital restructuring

Agriculture Minister David Carter has welcomed Fonterra’s announcement of its capital restructuring process.

“Given the roller coaster ride of the international dairy industry over the past 18 months, it’s good to see Fonterra taking positive steps to position itself for future growth,” says Mr Carter.

Fonterra was established in 2001 by Act of Parliament giving it an exemption to the Commerce Act to allow its formation while controlling over 95 percent of New Zealand's milk supply.

“This exemption was not given lightly and was conditional on the dairy industry achieving a step change in growth for all New Zealanders, both within and outside of the dairy industry,” says Mr Carter.

“Dairy industry leaders had a compelling vision of allowing the industry to work together, take on the world, and win. This vision required Fonterra to be able to access considerable amounts of capital on competitive terms. Eight years on, the Government is looking for evidence that farmers – as the owners of Fonterra – are serious about this vision and will support it financially.

“It is clear that progress is needed on capital restructuring if Fonterra is to deliver on its growth potential to both its shareholders and all New Zealanders.”

Mr Carter says the plan outlined today by Fonterra’s Board and endorsed by the Fonterra Shareholders’ Council, represents an important step towards achieving this.

“Farmers have long argued the importance of having a farmer-owned cooperative and that they should be given the first rights on funding any new investment. This proposal does precisely that.

“The Government will be watching with interest the outcome of the upcoming consultation process,” says Mr Carter.

ENDS

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