With a clear mandate, Fonterra will now consult the Government on how to give effect to the changes through the Dairy Industry Restructuring Act and chair Peter McBride is confident that common ground will be found.
Fonterra’s new flexible shareholding proposal has received 85% approval from farmers who voted before and at the special general meeting.
The board received a strong mandate for change when 85.16% of votes were in favour and 82.65% of eligible votes were cast.
With that clear mandate, Fonterra would work with the Government on how to give effect to the changes through the Dairy Industry Restructuring Act.
Chair Peter McBride believed that the co-operative and the Government were philosophically aligned and that a regulatory framework would be found.
During the short special meeting no farmers spoke for or against the proposal after the motion was put, except one in the room in Invercargill who congratulated the company on its widespread consultation.
In essence, Fonterra’s farmers had to decide whether they are a co-operative or corporate and the current model, with a foot in both camps, was not sustainable, McBride said.
“If we are only interested in the value of our shares, then we should fully corporatise right now,” he said before the special vote was finalised.
“But if we want to be a strong and enduring co-operative, we believe the capital structure changes we are recommending are the best course of action available.”
Fonterra has not always lived up to its promise, but the capital structure discussion was not about the past mistakes.
It was about enabling the future and taking a long-term view.
Where farmers decide to commit their capital, buy and sell shares between them, set benchmarks for milk quality, ethical and environmental practices and attract the smartest minds to work on farmers’ behalf.
Agriculture Minister Damien O’Connor said it was a great result for Fonterra and the high percentage who voted yes was an endorsement of the board’s effort to regain the confidence of farmers after a period where it was a “muddled co-operative”.
O’Connor said he had been in discussions with McBride prior to the vote and said they were aligned in wanting the best for Fonterra over the long-term.
“There are obviously issues around competition law, the rights of minority shareholders and obligations that government has when overseeing legislation,” O’Connor said.
“The proposal they put to farmers and then adjusted that has been brought to us – for the most part we support what they have put down – but there may be some minor amendments to some of the issues that colleagues have raised.”
Those issues include competition within the industry and that the rights of minority shareholders are maintained, he said.
“That’s really important and that the changes support not just Fonterra and its shareholders, but also the opportunities for future generations of the dairy industry,” he said.
