Fonterra farmers boost balance sheet

Things continue to go from strength to strength for dairy giant Fonterra with a successful capital raising of $61 million dollars from shareholders.

Strong dairy commodity markets that relate to good payouts for shareholders, a committed co-operative approach, reduced debt, and extra capital, shows the long term strategic plan is working well.

With more than 70% of shareholders taking up the allocation of shares, farmers have shown a commitment to their company, that meat co-operatives would envy.

Almost three-quarters of Fonterra Cooperative Group's farmer-shareholders have purchased an additional 13.5 million 'dry' shares over and above the milk production share backing required to supply milk to the co-operative. At the extended September 30 closing date for farmers to take up the dry share offer, $61 million worth of shares at a current price of $4.52 were applied for by farmers for the 2010/11 season.

Chairman Henry van der Heyden said their uptake "was a vote of confidence in Fonterra's performance and would further strengthen the Co-op's financial position." Capital structure changes to Fonterra were approved by farmer-shareholders in 2009 allowing producers to hold shares representing up to 120 percent of their milk production.

This percentage will soon increase as a 'Trading Among Farmers' option which was recently approved by shareholders, allows farmers to hold shares up to 200 percent of their annual milk production."This is good for the health of the Co-op and it also gives us as farmers more flexibility so we can buy and sell shares when it best suits our farm cash flows."More than 70 percent, or 7,500 Fonterra farmer-shareholders are now holding dry shares, and they are able to buy shares during a defined period each year.