Fonterra's farmer shareholders want changes made to the capital structure of their co-operative, but they are adamant about retaining ownership control of it and very cool on the idea of letting non-farmer shareholders in.
Those are the big take outs from the results of an online survey Fonterra has recently conducted, which sought the input of its farmer shareholders to a review under way of the co-operative's capital structure.
In short, 62% of the 1800 farmers who responded to the survey said they were in favour of a review of the capital structure.
But 82% of those responding said "maintaining farmer ownership and control of the co-op" was a priority for them. It was the biggest priority among those listed.
Just 4% of those responding said "being able to raise capital from non-farmer investors" was a priority.
It was also in 2019 that Fonterra announced a 'back to basics' strategy after reporting a financial loss of over $600 million due to a disastrous debt-funded global expansion plan.
Having a fit-for-purpose capital structure for the future is vital for the co-operative to enjoy future success.
At the moment only farmer shareholders may directly invest in Fonterra. But there are also Fonterra Shareholders Fund (FSF) units, which are open to all investors and which offer benefits and dividend returns from the performance of the co-operative - but no decision making power for the co-op. The FSF units also provide a mechanism for farmer shareholders of the co-operative to sell their shares.
Farmers have long opposed the idea of outside investors directly investing in the co-operative.
Fonterra chairman Peter McBride said in an email to farmers giving the results of the survey that the board was continuing to progress the capital structure review and the feedback from farmer shareholders was helping shape the options it was considering.
"We intend to be in a position to consult with you [the shareholders] in the next couple of months and if we decide to go ahead with a change, we would likely aim for a farmer vote around the time of the Annual Meeting in November. We look forward to discussing these results with you further during our farmer roadshow next week," McBride said.
Fonterra is announcing its half-year results on Wednesday (March 17). The co-op has shown greatly improved financial performance since reverting to the back-to-basics strategy.
However, it has already warned that while profits for the first half of the year are likely to be good - the second half will not be so good, as the rising price of dairy products starts to bite its margins.
Fonterra's currently signalling that its milk price paid to farmers this season may be as much as $7.60 per kilogram of milk solids, which would equal the second-highest price ever paid.
The latest hike in milk price forecast from Fonterra followed a stellar GlobalDairyTrade dairy auction two weeks ago.
There's another auction happening in the early hours of Wednesday morning this week. Another strong result may give the Fonterra management plenty to discuss at the half-year results briefing.