Out of interest, does anyone know the respective debt levels owed to each of PGG Wrightson, Rabobank and Westpac?

Is this the biggest farm group in NZ, if so, what's the implication to the dairy export industry? how many jobs are lost? any idea?

Ludwig, I understand that PGG Wrightson have approx 25mil and the banks share the balance

Grandy, the impact this season will be minimal. Korda Mentha will be learning that to milk all those cows, which will continue through to next Autumn. The farm production maybe allowed to drop but the majority of milk will end up at Fonterra plants. It is unlikely these farms will be sold mid season, as most dairy farms change hands on 30th June when milking is finished. So the banks will want the cash flow....
Biggest issue is that this number of farms and cows going on the market next year will depress the market somewhat, but I expect they will sell.
Crafar's have been poor Directors for this scale of farming, so have only themselves and the banks to blame. In fact that is farmings biggest problem, we have poor business leaders at farm and the Agri Business level which the country needs. We need some smart brains in this business to secure all the market opportunities, Alan Crafar's business acumen is an example of what was not needed. Thank you Bernard for exposing this sorry story.

Backup the receiver truck.
Adolf if there are 30000 cows involved and they would produce 400kg each(we are being positive today) that would mean total of 12000000 solids x $40=480000000 in farmvalue.
So whatever the correct figures are they will not be good.
For the banks to step in it must be realy bad, otherwise they would have just kept pumping the money in.

Wasn't there talk on this website of the Crafars renting their cows; how does this affect the receivership? Are the cows still in there until the term of lease is up, or do the owners take them home? I'm guessing that a bank or finance co owns the stock, not other farmers.

got wrong thread trying again sorry,

Elworthy summed it up,

http://www.stuff.co.nz/timaru-herald/news/2927502/Elworthy-to-invest-11m...

Mr Elworthy's newsletter expressed concerns that dairy could become the "subprime of the South Pacific", as too many farmers were over-leveraged. "If the New Zealand dollar continues to be strong then a number of NZ dairy farmers who purchased at high land prices will be insolvent," he said.

You what?! *!$ 200 million.... The photo (on this website of the Crafer family) and Allan on the TV the other night (trying to cry) I wouldn't lend this outfit a cent from my daughters piggy bank, even if I was promised a 1000% return... I guess NZ is really screwed if NZ banks have loaned a lot of money to these outfits!! :-(

What's an average size dairy farm worth?

Gunman running around milk farms in Southern Hawkes Bay- you don't think it is do you??? Perhaps he is looking for BH....

The Bank Manager - "$200m is only $6,700 per cow plus the value of the land." ... I think this analogy leads to an incorrect over valuation.

That, that they are currently running, is not what can sustainably be run...

400 kgs of milksolids per cow from the Crafer operation? I would suggest 250kgs may be nearer the mark. This operation has a history of buying the cheapest stock and conversely selling the same in the market. They buy budget (glorified culls), farm poorly and under produce.

Dairy farm settlements are normally transacted on the 1st of June in any given year.

Have we returned to the days of the oligarch? This situation of the coalescence and amalgamations of vast tracts of rural properties last existed in the 1800's. Properties and operations of such a nature were found to be inefficient in those times, what has changed? Is it perhaps time for the 'Closer Settlement Act 1891' (approximately) to be revisited and these mournful and burgeoning estates 'burst'?

Irrespective of all other factors claimed, the driving force behind all such locomotives is greed and the stoker of the boiler is generally a greedy banker. Such situations often lead to derailment.

An accurate summation, King Dick.

But still leaves the future a tad murky, does it not?

The largest group of dairy farms in NZ going into receivership will have major repurcussions.....

Chair up guys life goes on....They are less than a percent of Fonterra supply. The government supply Fonterra more milk through Landcorp!

"Chair up "??

More chance of removing the housing allowance..... with a salary increase to compensate.

We can all chair up now that the recession is over!!

Who's for a burst of Fonterra advertising to wash away the effluent with a wave of milk and restore public belief in "old macdonald with his farm...."

W Kunz: In comparison to milk production/ other countries, why does NZ not export more butter etc. but particularly cheese ?

have you eaten nz cheese? soft, slimey coloured rubber. You would be forgiven for thinking it was an oil by-product, not a milk-based product.
Sure, the smaller producers make a lot of good stuff, but its sold in the supermarkets at sky-high prices. compare to 500g of camembert for under a euro in france and you can see why they eat 3 times as much cheese as us.
even the english mock our mainstream cheese...

I support the comments above by Roger Thompson, and R J Sneddon. May I expand? In the majority of case owner operated farms are more efficient than large scale absentee owned farms. I would argue large scale farming is competitive, as long as the owner is hands on, and not spread too thinly over multiple farms, to ensure the optimal operation of a complex and challenging business. The challenge is to balance growth with greed, and many don't let the thought of responsible farm management (from the owner, not the overburdened employed manager) get in the way. However these operators are ingrained in the dairy industry often letting their egos sidetrack them into industry politics, arguably for the benefit of themselves ahead of the industry. An example is Allan Crafer as a member of the Fonterra Shareholders Council, and there are other current examples, however it must be said dairy farmers voted such people into such positions. Furthermore as a dairy farmer I find it frustrating when apparent successful large scale operators feel it's their duty to offer advice via industry publications or events. It's almost embarrassing, as these people haven't got their hands dirty, for years.
Granted some of the advice is sound, if not overly simple, such as concentrate on profit, and avoid investing in depreciating high maintenance assets. A gem often offered by a current industry heavyweight, is to "˜harvest 10% more pasture without increasing costs. While I agree with the concept I would argue it takes sound management if you are to avoid animal welfare and environmental issues not to mention financial. It grates when this advice is offered to people who aspire to farm ownership, as the large scale corporates are the very people who drive land prices beyond productive value, therefore denying progression for others. The Crafers practised this philosophy, with visible results. To maximise profit they aim to convert maximum amount of grass into milk. To do this they increase stocking rates, in excess of what would be considered sustainable, for example where most farmers may have 2.7 cows/ha, they would have 4 cows/ha, therefore ensuring that maximum amount of grass is harvested and turned into milk. This high stocking rate significantly reduces the risk of getting crucial pasture management decisions wrong, which is the crux of successful sustainable pasture based dairy farming, as it reduces the need for thinking or active decision making. The cows harvest all grass available, and the flip side is starve in the process, as there isn't enough grass for them to maintain themselves and produce the milk that they have been genetically programmed to produce. If investment in stock was minimised, such as only buying budget cows, then losses relative to income are minimised. This model of farming takes the risk out of being able to successfully harvest grass and convert it to milk, a process crucial to productivity and profit of the NZ dairy industry, and the economic welfare of NZ. Disagreeable as it may seem to some precious people not directly involved in farming, NZs standard of living is inextricable linked to this process.
Given that production on Crafer properties would be 250 kg/ms/cow, max, however due to the high stocking rate it would stack up well per hectare (available land area), likewise on other large scale farms who operate under a similar model. A question regarding the receivership of the Crafer farms is could new management decrease stocking rate to 2.5 cows and increase production to 300kg/ms/cow? Given poor infrastructure, and I suspect fertility, I doubt it. Therefore what value are the properties going to be marketed on, Crafers unsustainable values, or a realistic productive value?

No prospectuses yet ? I thought that Allan Crafar's farms would be securitized by now , bundled together , carved up into 100 million two dollar units , and flipped off to the blue-rinse and silver-fox brigade in the better parts of Auckland . Don't tell me that securitization is dead !

Bet the advertising liars are busy as churning out the new Fonterra BS adverts. Should hit the fan in Oct. Expect happy country scenes with lush green grass and singing cows.....

Wally : I picture your scene , Fonterrible Inc : Lush grassy hills , cows mooing softly , a block of cheese comes ka-thunk of of the sky onto the foreground , and then pan camera to Julie Anrews , " the hills are alive with the sound of money .. .......... " . Cool !

That's the first time I have read anything about that sort of model (cull cows + high stocking rates +?). I saw something on the news but it was just about animal cruelty.

I wouldn't want to be on the directors board of the bank that finanaced these boys!

I mean your due to have a chat to the IRD and a JUDGE and you look out the window to see....
THE COWS COMING HOME ha ha.....

PGGW will also likely be an unsecured creditor for farm inputs/supplies ........ likely the biggest unsecured creditor?? They should disclose their exposure to the NZX ,,, it is material and price sensitive. Perhaps Bernard might give them a prod??

Chip - PGW will be doing their Level best to keep their heads down...they need to complete the "credit rating process which is required by March 2010" in order to maintain their Govt deposit Gaurantee status.

This statement from Mark Darrow, head of PGG Wrightson Finance " sums up were they are at...

"Our first focus is to continue to support our existing clients, and we are
not looking for growth in the immediate future as we carefully navigate
through the myriad of regulatory changes scheduled over the next 18 or so
months. Our focus remains on business quality, internal improvements and
maintaining higher levels of liquidity to match the times "

http://www.directbroking.co.nz/directtrade/dynamic/announcement.aspx?id=...

Farmer Will - I want to live on your Farm... but, afraid I won't "Dress out" well.

mouse

With a name like mouse I suspect your carcase weight could be a little disappointing.

Farmer Will - "specially those on drystock farms. Predator free hills to climb, lots of mates, lots to eat and drink, a health plan, better than a lot of people get."

They do miss a superannuation scheme!

Re: Above, 'Bull Curve' should read 'Bell Curve'. A freudian slip perhaps?

Is shade much of an issue on farms with pivot instigators?

Never forget people that at the end of the day, greed is the greatest protagonist of all the ills of this world.

Plenty of farmers happy to see the back of the Crafars as well Tony.

Tony, correct me if I'm wrong but aren't the Crafers hell bent on selling to the Chinese?
They weregreedy denying other hard-working more capable Nzs the chance of farm ownership (in conjunction with incompetent banks), they have had a negative impact on staffing in the industry, not to maention the management issues, and they are trying to instigate a final travesty, and sell to the Chinese!
If Crafers were serious about enjoying the benefits of working hard in the NZ dairy industry they would have grown within there limits, which is quite obviously 1 family farm. I have had to try and employ people who have worked on 'their' farms, and also speak to contractors, truck drivers etc, and what has been reported in the last couple of weeks is correct. Crafers were sub standard large scale operators (they don't deserve to be labelled farmers).
However they aren't alone in the Central Plateau

Hi Apple Tree

Obviously as negotiations for the sale of the farms are continuing, I am unable to say who the Crafars would prefer to sell to. What I can say is they, along with thousands of other New Zealanders, would probably rather wait until property/farm values went up, rather than accept an offer from anyone at this point in time.

As with any workplace there are good and bad employees, the Crafars have been fortunate to work alongside some of the top farmers in the country and have often been responsible for assisting other's futures within the industry.

The Crafar family are definitely farmers in the true sense of the word, anyone who knows them well will attest to that.

Anyway, I could sit here endlessly playing text-table-tennis with those who oppose the Crafars, and although I would defend the entire family with all my might, I have businesses of my own to take care of.

Farming included, the country has taken a real knock in the past 18 months and I for one, intend to use all my time and energy to make sure I'm not another notch on the recession's belt.

Cheers, Tony.

One has to focus specifically within niches, and leads that are prone to receiving the right contact can provide a great source of customers and ultimately income for the company.

The New Zealand Farmers Weekly reporting $10.6 million of Crafar debt unsecured. Also in the article "including Crafar land this constitutes a total of almost 16,000 ha of dairy land available for sale in a 100km radius of Tokoroa.

Don't forget, we the taxpayer have a large investment in 'young poorly developed sandy, pumicious central NI soils' Thanks to Landcorp. I hear that Galatea, Reporoa are in a massive drought at present,how are you getting on?

AndrewJ and PeterR are opening up a more important future concern rather than raking over past events.
Unfortunately the "culture" that PeterR maybe refers to is shown at each extreme by the receivers (as Tony Bright has referred to), Alan and Frank to some degree, Wrightson with UFS, most banks and Landcorp.
This is one of almost arrogant disregard to listening and assessing wider (and probably wiser) counsel and moving rapidly rather than in a measured way.
This contrasts sharply with the attitudes from researchers, advisors and bankers in the period of most rapid development in farming from the 50's through to the mid 80's.
Many of the lessons learnt over that period have been forgotten or ignored and a new
"culture" of supreme self confidence embraced - without the underpinning of clear analytical thought.

The future for commodity agriculture does not lie within NZ.
So what to do now for the only "first world" country that still relies on agriculture for the majority of its overseas earnings and appears oblivious to the need to take this into a new more innovative phase?

Maybe he hit a raw nerve. The fact that a monopoly appears to be using the local market as a cash cow, at 12.5 liters of milk to a milk solid, you begin to get an understanding of the scale of the monopoly rent the NZ consumer is paying. In the UK its less than$1 NZ a liter for fresh milk. Its daylight robbery. The problem is on one side are the dairy farmers,the NZX, Fonterra and some MP's, on the other the poor old NZ consumer. Yes I support dairy farmers but as a monopoly NO. Fonterra should never have been given this much power in the first place, its a bloody mess that needs to be put right.

Well it obvious were the conflict is, when 'good analytical reasoning' meets a bunch of wally's. ( no offense Wally)

As a dairy farmer I find a couple of comments above interesting.

Firstly AndrewJ, I believe you will find that the price of milk in the UK has more to do with Govt intervention than your so called Monopoly.

Secondly your Monopoly comments are interesting. There are currently 3 farmer co-operatives in NZ, Fonterra, Tatua and Westland, along with Open Country, New Zealand Dairies and Synlait, with a further 2 -3 new companies in the pipeline. Obviously Fonterra is the largest processor, but as well as supplying these competitors they also supply smaller processors who have none of their own supply, like Kaimai Cheese etc. As far as I can see the biggest rort around is being done by 2 companies, Foodstuffs and Progressive.

Third point - NZ is the only First world country reliant on Agriculture, why is that such a bad thing. We do it well compared to the rest of the world, no subsidies. Perhaps we should follow the likes of Iceland (move away from fishing) and Ireland..... Remind me how are those countries at the moment.

Back to the original point on the number of farms on the market, the papers don't lie in this instance, stacks of farms on the market, 35% decrease in price from the peak, with the 2nd highest payout this season expected, might be the right time for a few of you to buy in given how much of a monopoly and rort it is.

Farmer Bob, I not intentionally trying to offend farmers, just provide some critique of the leadership. I appreciate the farmers who work until their bodies are stuffed,and have always enjoyed my time with them. However the structure that is Fonterra would never have been formed without the Govt of the day waving it past the commerce commission,it may not have a total monopoly but it behaves like it has.
I think your future as a farmer is tied up with what are called CDO's and credit-default swaps. The casino that has been formed in the banking industry, controls all our futures. As Paul Volcker said,"there is not one shred of neutral evidence that any financial innovation of the past 20 years has led to any economic growth".
I feel that Fonterra by inflating payouts above the market ,has lead to many of my friends becoming hopelessly indebted. This debt will hang around the industries neck for years and money that should be spent in our community will find its way to the coffers of the rich banking masters in the form on interest. We are too exposed to the risk of rising interest rates which must depress land values.
Iceland's fish stocks were raided by the UK and Spain. Ireland has too much debt and crap leadership, our problems are not that far removed and I keep reminding myself of the consequences of our nearly 200 billion dollars of foreign debt and our dependence on debt owed to mostly Australian controlled banks. Most of our trading partners face years of austerity this wont help our exports, potential wars in Iran and Pakistan hang over the world, nuclear proliferation is rearing its ugly head. I have no crystal ball but I think we have at least 10 lean years ahead of us.
I have some friends who are now getting good jobs running dairy farms for the banks,if the prices for dairy farms are back by 35% and the banks are putting managers in rather than meet the market id expect further falls. Id expect the market to stay subdued until production falls. I'm worried abut our cost structures ,costs cannot continue to climb as in the past or you like the Wine industry will get Systemic failure,that is, if you have not unknowingly already crossed that threshold. I don't get the idea of factory farming cows in Omarama. It looks completely daft to me.Where is the feed going to come from? wouldn't they be better of moving the cows nearer to a major city and trucking the feed in. I don't see any cost advantage of feeding cows in stalls in NZ over doing the same thing in Missouri. I think the future of farming in NZ may be less cows,less production and the associated lower costs that come with less intensive systems.

AndrewJ your post at 10.35 echoes my own opinions. Farmers have sold themselves into slavery and peasantry. No surer than when we had kings and queens and lords and barons.

These guy's have an interesting take on farming

http://www.stuff.co.nz/national/farming/3234378/Corporate-farming-here-t...

For at least two decades farmers have been upsizing to get economies of scale. Mr Kelly thinks the days of the small family farm are numbered.

"If I take the dairying industry for example, as recently as 10 years ago, the average herd size was 150 cows, now it's 300 and growing, ... so I think the concept of corporate farming, as in a large farm, will only increase."
The biggest players in New Zealand are Landcorp, the 58-farm South Island-based Dairy Holdings Ltd, the Cushing family's $200 million, 30-farm New Zealand Rural Equities Ltd based in Hastings, and some of the Maori incorporations.

With the exception of Landcorp, these are all in private ownership. In Australia, insurance companies own many of the high country stations where they can get the benefits of massive scale.

But that kind of model is thin on the ground in New Zealand, and there are no NZX-listed farming operations, with the exception of PGG Wrightson's venture in Uruguay.

Experts agree this is largely because farming is an asset-rich, cash-poor activity, unsuited to short-term investment.

"In farming most of the economic returns you get are from capital gain of the land as opposed to cash dividends and that just doesn't suit the corporate model in New Zealand," says Mr Kelly.

According to one estimate, income-only farming returns hover between 2 and 4 per cent, no better than some banks.

Farm syndication firm MyFarm begs to differ.

Thanks to land development and lower mortgages, it is forecasting short-term annual dividends of 6 to 7 per cent on some of its farms.

"With low debt and land prices going down in the past year and disillusioned investors [from other sectors], the focus for us is very much on cash returns," a spokesman says.

When capital gains are tossed in, investing in a farm becomes even more alluring.

The average farm price grew 16 per cent between 2000 and 2008. MyFarm has averaged a similar rate of return for the last five years.

Well we know from this report - Australasian Investment Fiduciary Conference 2006, Rotorua, New Zealand .link- http://www.omo.co.nz/Farm_Price_Research-AIF_Conference.pdf
That these are complete and utter bloody LIES. These comments lack the facts to back them up . Did CATHERINE HARRIS get her Journalism degree from the back of a weetbix pack.

Next lets look at the Wool industry

http://www.stuff.co.nz/business/industries/3231547/Farmers-angry-at-New-...

Many merino farmers think the salary rewards for top executives at their sales marketing company New Zealand Merino Co are too high, one disgruntled farmer says.

The high-profile farmer said he was upset after disclosure by one of New Zealand Merino's stakeholders that the industry was "struggling" yet the salaries were high in comparison to similar-sized firms.

NZ Merino had around 30 staff, yet chief executive John Brakenridge was on a salary in the band of $730,000-$740,000 for the June 2009 financial year, the farmer said.

Furthermore, three other employees were on salaries of between $240,000 and $280,000, according to statutory accounts for NZ Merino's 50 per cent shareholder Merino Grower Investments Ltd (MGIL), representing merino farmers.

NZ Merino is owned in a joint venture between MGIL and PGG Wrightson, which this week announced a restructuring of the company's board to give farmers an extra director representative, a move by merino farmers for more influence, including over salaries.

The question is `how come these farmers in the Mackenzie basin are saying they're struggling, when we see Icebreaker doing very well?'... "

A number of growers had been unhappy about the pay levels for some time and up to 50 per cent would probably be opposed to the high amounts, the farmer said.

But those farmers had not raised the issue for fear of losing contracts, he added.

What the hell what have we come to, "But those farmers had not raised the issue for fear of losing contracts." Are we run now by a Cabal of over hyped and overpaid elites like MR Kelly who rule with fear this disgusts me they all should be sacked.
I made $4 a ewe on Wool after costs last year that guy running the Merino NZ would need to run 100,000 ewes to get that income and have capital investment of 20 million + . Whats wrong with us are we run by Idiots?

Robpeter
So in simple plain English. The tax payer is going to pay the carbon tax for the dairy industry at present that would be about $35-50 K a farm. Yep that definitely a subsidy.

Robpeter, Milk powder appears to be softening,looks like NZ maybe going to have to compete for the Chinese market

POWDER MARKET COMMENTS: "Demand is fair and along expected levels to contract customers, but is slow to develop for new or export interest. Stocks are building at many locations." That quote from DMN market watchers this week doesn't bode well for near-term prices for nonfat dry milk. Apparently many plants didn't like to see inventories rise as much as they have. Some sales this week were reported to be $.12 per lb below the low end of the West's "mostly" price range. Yes, the market is unsettled. However, average prices for last week's sales reported to the two major price compiling agencies gained all that was lost the prior week when end of year sales boosted volumes but busted prices. A special notice from China this week, which stated they expect to increase their imports of milk powders by a huge amount in January, issued supposedly to alert all interested parties to the potential disruption to regular supplies, should help to bolster global powder prices. It's CHICAGO
believed that the principal kind of milk powder referred to is whole milk powder, something about which the U.S. dairy industry shows very little interest. Go figure this: the same day China gave its notice, prices for extra grade and grade A nonfat dry milk on the CME dropped by $.07 per lb, and are now below the weekly average prices
for sales made last week.

andrewj-re your 9.39 link
chris kelly from landcorp is banging on about what a ledgend he is and how they [manage?] a 1.7 billion dollar operation. he state,s that they return the govt 18% annually inclusive of capital gains.--- according to treasury for the last 2 years--08--09 landcorp has distributed-- 08----12 million+ 09--13 million---this is a return of about .75 of 1%---they,re hardly setting the world on fire even with the gfc
http://www.treasury.govt.nz/government/financialstatements/yearend/jun09...
good heads up from your posts
cheers

Greetings, good to see some critical discussion on the dairy industry, and would like to add to the debate, at the risk of being out of line, no offence intended.
Regarding above comments about Peter Fraser. I know very little about him myself, but have heard a shareholders councilor express frustration in dealing with him. I could empathise, as he painted him to be yet another detached, ill informed Wellington bureaucrat.
The concept of DIRA may have been honorable at the time fonterra was proposed, but I can't help but think the real agenda was murky, and not concerned about "˜healthy' competition for the benefit of the NZ dairy industry and consumer. If role of DIRA was to regulate price paid for dairy products by NZ consumers, it has failed, and maybe Farmer Bobs comments about supermarket control is worth delving into further.
Farmer Bob, why aren't Fonterra shareholders, and the NZ public for that matter, jumping up and down re DIRA? The silence of the board is deafening, and I felt embarrassed at a xmas bbq when a board member yet again spieled out that it enabled Fonterra to exist. Other "˜small' processors notwithstanding, DIRA was the death knell for Gisborne Milk co-op, as it couldn't compete with other so called "˜independent' processors (who had cosy relations with supermarkets) receiving subsidized milk mandated by the government from Fonterra. Would it be fair to chalk the demise of Gisborne Milk up to Peter Fraser. What is more infuriating is the use of DIRA by politicians to form start up processors eg OCC (Wyatt Creech, John Luxton) Synlait (Ruth Richardson), NZ Dairies, and in the pipline, Oceania Milk (Don Brash), and their offshore backers. So the way I see it DIRA mandates milk (profit) subsidised by Fonterra to flow offshore for the benefit of a few wealthy and well informed New Zealanders. I think I'll keep an eye on Peter Fraser and see where he pops up.
I support Lachlan McKensie in his stance on the continuation of Fonterra as a co-op, and believe he is validated in the success of the NZ dairy industry up to the formation of Fonterra. However in support of PeterRs comments I'm concerned at the leadership of Fonterra and what looks like corporate culture undermining traditional robust co-op ethics. I think large scale shareholders (most directors, land corp, dairy holdings etc) have undue influence through the voting structure and election process. Why can't it be one vote per shareholder?

This dissection and comment on Fonterra is currently being/been played out in Silver Fern Farms(once was PPCS)
For those that caught the articles in the Independent before Christmas, from chalkie and SFF chairman Garden , this is the sequel -

" Chairman Garden displays a vacuous knowledge of co-operatives if he and his board had to go searching for an answer to what one was.
He or his management team could find the answer under NZ Co-operatives Association, to realise Co-ops do have a number of unique characteristics:

* they are owned and democratically controlled by their members "“ the people who use the co-op's services or buy its goods "“ not by outside investors

* they return surplus revenues to their members in proportion to their use of the co-op, not in proportion to their investment or share ownership

* they are motivated by the need to meet their members' needs for affordable and high quality goods and services, rather than profit for its own sake

* they exist primarily to serve their members

The member-owners share equally in the control of their cooperative, meeting at regular intervals to review detailed reports and elect directors from among themselves..

Despite these principles, the Board and Management of SFF with their spin-doctors, promoted corporate ideals that amended the governance, capital structure and profit distribution mechanisms, and got support of enough transacting shareholders to succeed, but that support actually constituted just 10% of total shareholders.
This steal of the century, effectively disconnected SFF suppliers from: 100% ownership of their co-op, the security of redemption of shares at par value, and reduced their representation on the board, and old shareholders are now voting with their livestock, and supplying other processors.
How remiss of the Board to not explain, or ensure Grant Samuels explained, the ramifications of shares trading below par in the 2009 proposal.

SFF now finds itself on the slippery slope to a corporate structure, inevitably fully listed, reporting to and performing to investors' expectations.
Time is running out for SFF to realise that livestock, loyalty, performance and profit determine their business, not downsizing processing to match their shrinking business.

History has proved the value of co-op ownership in the meat industry as margins generally don't exist to pay suppliers via schedules, the end of season rebates, and also dividends to non supplying shareholders, and the blowtorch of corporate reality will severely burn these pretenders satisfying two masters.

Chairman Garden can talk up equity and value all he likes but the market will now value SFF shares on performance and profits relative to their competitors, and he will need to explain the loss of value in SFF to those that did and didn't buy the ruse."

SFF holds their AGM in Gore 1pm. Weds. 27 Jan.2010 and is the first opportunity to update shareholders how our shrinking, poorly performing, co-op/corporate is doing.
No chance to elect new directors as the present board suspended elections for a year.
LONG LIVE FARMER CO-OPS.

French Farmer, I still farm quite a few beefies as a buffer for the dairies. I will not ever supply PPCS again. When I was shafted over the shares I was forced to buy to supply, and then not allowed to either vote or sell these shares, I decided never again. I would imagine many are as pi$$ed with PPCS as me.

International Farmer.

Regarding above comments about Peter Fraser. I know very little about him myself, but have heard a shareholders councilor express frustration in dealing with him. I could empathise, as he painted him to be yet another detached, ill informed Wellington bureaucrat.

Your shareholder councillor's frustration says a lot. I did know Peter when he was at TSY, and yes he was a bureaucrat but also a territorial soldier. Peter was passionate about his work, and at the time on a steep learning curve regards NZ agriculture.

In 2006 Treasury asked Fonterra questions regards agricultural debt and redemption risk and was informed neither was an issue for the dairy industry. By 2009 debt and redemption risk were major issues. I suspect Peter had by then gained a good understanding of how Fonterra operated, dairy farm profitability, and industry debt.

That understanding went much deeper and into production economics but is unlikely to have included the ongoing 11% capital gains that Fonterra's new director has espoused, or the almost unlimited profit increases from production intensification advocated many researchers, or the perceived benefits and economies of scale from corportate dairy farming misrepresented by Chris Kelly.

Your shareholder's council member and our Farmer Bob may have found that frustrating. If the former had had a case Peter would have been open to it. I suspect the problem was that even collectively the entire NZ dairy industry was not capable of making a cogent case (that would stand Peter's analysis) for sustaining its asset bubble. So Peter's dairy portfolio was reallocated - the bureaucratic equivalent of burning a heretic at the stake, and a warning to others.

That will make it easier for those in the dairy industry to spin the resumption of a credit driven asset bubble, but the removal of the brightest people with the highest integrity leaves the industry with only weak and/or intellectually shallow representation. But hey, that is part of how systemic failure works.

this link is very imformative ---re fonterra----don.t know who the author is
http://www.agprodecon.org/node/36#Introduction

Thanks 4 A Great Post! I've heard Credit Report is definitely a excellent site to get my credit & get my score 4 nothing. Has anbody else tried it?