Few farmers can afford extra shares

Half of farmers won't be able to afford to buy the additional shares being offered by Fonterra from today, farmer lobby group Federated Farmers says. Fonterra's farmer owners voted in favour of allowing themselves to take up an extra 20 per cent in the co-operative last month as part of a three-stage capital restructure of the business. Fonterra needs more capital to address the risk to its balance sheet of its farmers cashing in their redeemable shares, and to fund global and domestic growth ambitions. At the moment its 11,000 farmers must buy one share for every kilogram of milk solids they produce but the change allows them to take up an extra 20 per cent of "dry" shares which don't have voting rights but will be eligible for a value-add dividend payment. Federated Farmers dairy chairman Lachlan McKenzie said he didn't expect farmers to be rushing to buy the shares straight away because many had yet to receive all the information reports The NZ Herald.  Farmers would also be waiting to see what the milk forecast for next year would be before making up their minds. They have until January 21 to make a decision and have to pay by February. Those who don't take part in the first offer will be given a second chance later in the year. McKenzie said there were a lot of farmers who were keen to have a look at it and do the number crunching. But he estimated 50 per cent would not have the financial capability to buy extra shares. McKenzie said farmers always had things on their own property that needed investment.