SI farmers buy bulk of Fonterra shares

SI farmers bought most of the $271 million Fonterra dry share issue.The co-operative says South Island farmers collectively purchased a total of 30 million of the $4.52 shares, to a total value of $135.6 million.Central South Island was the biggest purchasing region, buying up 17 million shares reports The Taranaki Daily. Federated Farmers is applauding the $271 million invested in the co-operative by Fonterra's farmer-shareholders. "In less than stellar economic times, around one-third of Fonterra Co-operative Group's shareholders have 'shared-up'," says Lachlan McKenzie. "The $271 million raised will become udders containing over half a billion dollars when bank facilities are leveraged off it. That's a sizeable amount from which to look at acquisitions that will add value to the co- operative's financial performance. "The federation now wants to see Fonterra develop a retentions policy that will build on this war chest. While there's been much uninformed comment on Fonterra's debt, the co- operative's debt-to-debt plus equity ratio trajectory is tracking back to board guidelines of 45-55 per cent. Late last year, Fonterra injected $53 million into its joint venture with the world's largest dairy co-operative, Royal FrieslandCampina, to acquire FrieslandCampina Domo- Pharma - a pharmaceutical grade lactose manufacturer. Mr McKenzie said this was a pointer to what's possible going forward. "Our estimate is that at least 50% of farmers do not have the ability to buy shares. The banks have tightened lending criteria while farmers are prioritising debt repayment. In both islands, farmers have a wary eye on increasingly dry conditions that affect farm budgets and their ability to buy dry shares," he said.