Fonterra announces final 2012 payout down 19% from last year, due to lower prices, high New Zealand dollar

Fonterra announces final 2012 payout down 19% from last year, due to lower prices, high New Zealand dollar

Lower commodity prices and the high New Zealand dollar mean Fonterra's final payout for 2012 is down 19% from last year.

Announcing its annual results on Wednesday morning, Fonterra said the final payout of NZ$6.40 per kg of milksolids for a fully shared up farmer included a lower Farmgate Milk Price of NZ$6.08 per kilogram of milksolids (kgMS), down from NZ$7.60 last year. A dividend of 32 cents per share was announced, with retentions of 10 cents per share.

See the release from Fonterra below:

Fonterra Co-operative Group announced today a payout of $6.40 for a fully shared up farmer for the 2012 year, 19 per cent down on the prior year.

The result includes a lower Farmgate Milk Price of $6.08 per kilogram of milksolids (kgMS), down from $7.60 last year reflecting lower commodity prices and a strong New Zealand dollar.  A dividend of 32 cents per share has been announced, with retentions of 10 cents per share.

Announcing the result, Chairman Sir Henry van der Heyden said the 2012 year had been one out of the box for dairy:  “All around the world, we saw record dairy production which was mirrored back here in New Zealand.

“Global dairy demand held up reasonably well but this ocean of milk obviously impacted on global commodity prices, with the GlobalDairyTrade (GDT) index reaching its lowest value in 34 months in May.

“This contributed to a lower Farmgate Milk Price in the 2012 year, however, the impact of this decline on overall earnings for farmers has been eased a little by the much higher volumes of milk they produced.”

Fonterra Chief Executive Theo Spierings said the Co-operative had posted a strong operating performance, with normalised earnings1 of NZ$1.03 billion for the 2012 year, up 2 per cent on the prior year.

Profit before tax was up 9 per cent on the prior year and net profit after tax was $624 million, down 19 per cent, largely due to tax credits of $202 million in the prior year not repeated in the current year. Excluding those credits, Fonterra’s net profit after tax improved by 10 per cent.

Results highlights compared to the prior year include: -

·         Record New Zealand milk flows, up 11 per cent to 1,493m kgMS in the current season

·         11 per cent increase in export volumes to 2.32 million metric tonnes (MT)

·         Sales volumes increased 2 per cent to 3.94 million MT

·         Flat revenues of $19.8 billion

·         Higher operating cash flows of $1.4 billion, up $206 million

·         Balance sheet strengthened with economic gearing ratio improving from 41.8 per cent to 39.1 per cent

Mr Spierings said the result showed Fonterra’s success in growing both volumes and value.

“The hard work of our farmers in producing record milk flows was matched by the efforts of the business in processing, selling and shipping these higher volumes, while also managing inventory levels,” said Mr Spierings.

“We know volatility is here to stay and we showed our ability to manage this volatility by adding value to our products, generating prices above GDT.”

Business units

NZ Milk Products

NZ Milk Products had a strong year, with a 23 per cent increase in normalised earnings to $515 million. Revenue increased by 1 per cent to $15.72 billion for the year. Effective product mix management, a 7 per cent rise in sales volumes to 2.8 million MT and the ability to attain prices above GDT through continued efforts to add value to our products. Year-end inventory levels were $373 million lower at $2.13 billion, with a 14 per cent increase in volume on hand offset by lower prices.

Australia New Zealand (ANZ)

The integrated ANZ business faced a difficult year with a 20 per cent decline in normalised earnings to $204 million. After adjusting for the sales of the Western Australian dairy business last year, volumes were down 4 per cent or 44,000 MT4. The lower earnings were impacted by lower prices to support market shares across all categories. Normalised earnings were up slightly in New Zealand; however, the trading environment in Australia remains challenging with a continued downturn in consumer spending and aggressive competition. The ANZ business is implementing a plan to increase profitability and maximise cash flow in these tough market conditions.

Asia/Africa, Middle East (Asia/AME)

Asia/AME achieved good results given the various challenges, including supply constraints and flooding encountered during the year with normalised earnings increasing 1 per cent to $194 million. In constant currency terms, Asia/AME achieved an increase in normalised earnings of 8 per cent. Sales volumes increased by 3 per cent4 contributing to revenue growth of $62 million, with strong performance in Sri Lanka, Vietnam  Hong Kong, Philippines and Malaysia contributing to this result. The “big three” brands of Anmum™, Anlene™ and Anchor/Fernleaf™, all achieved revenue growth, with Anlene now the established market leader in over 10 countries across Asia, and the Middle East.

Latin America (LATAM)

LATAM’s normalised earnings increased by 16 per cent on a constant currency basis. Sales volumes increased by 2 per cent4, driving a constant currency increase in revenue of 4 per cent, with growth achieved in milk powder and beverages. Improved product mix, along with product innovation and higher volumes in higher margin products such as mature cheese contributed to the result.

Strategy Refresh

During the year, Fonterra completed a review of its business strategy and reorganised the business to align with its Strategy Refresh. The Strategy Refresh is now being deployed via approximately 90 projects, each aimed to deliver higher volumes and value for the Co-operative. Restructuring costs of $30 million associated with this re-organisation were included in the current year result.

The Co-operative is targeting to reduce operating expenses by $90 million, and is aiming to deliver $60 million of this amount in the 2013 financial year.

Global Situation

Fonterra announced in August a forecast Farmgate Milk Price for the 2012/13 season of $5.25 per kilogram of milksolids.  While there has been a combined increase of 9 per cent over the last two GDT events, the recovery had been expected and was partly offset by further appreciation of the NZ dollar versus the US dollar.

(Note: Fonterra is working towards the launch of Trading Among Farmers later this year and is in a “blackout” period until the release of its prospectus.  Accordingly, the Co-operative will not be updating its earnings forecast at this time.)

Click here to view Financial Statements & Statutory Information

Click here to view Annual Results presentation

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75 Comments

Please explain 19% fall in payout to prior year?
This years press report
 
Last years press report

The 19% drop is the nett to farmer payout, not gross payout - last year nett was $7.90 this season $6.40.  Of course not all fully shared farmers receive that payout as it depends on milk composition  etc.

Are you suggesting that the 32 cent dividend is what is paid out i.e. after deduction of retentions?

Colin, div 42cents. We got 12c earlier, 20cents to come in October.

The 20 cents is to be paid in the 2012-2013 season. The earlier 12 cents - same or different financial years?

The 12cents was paid in April Colin. 

I remain confused as to what Fonterra's dividend was in the 2011-2012 year. Extracts from Fonterra's accounts:
 
t)    Dividends
All shares are eligible to receive dividends if declared by the Board.
Dividends are recognised as a liability in the Group’s financial statements in the period in which they are declared by the Board.
 
Dividends paid
All shares are eligible to receive a dividend if declared by the Board. On 21 September 2011, the Board declared a dividend of 22.0 cents per share (totalling $303 million), paid on 20 October 2011 to the Shareholders on the share register at 31 May 2011.
 
On 27 March 2012, the Board declared an interim dividend of 12.0 cents per share (totalling $172 million), paid on 20 April 2012 to the Shareholders on the share register at 31 March 2012.

The dividend declared after balance date is explained in Note 24.
 
Note 24     Subsequent events
On 25 September 2012, the Board of Directors declared a final dividend of 20 cents per share payable on 20 October 2012 to the Shareholders on the share register at 31 May 2012.

 

 

Fonterra's $8.2m farewell to Andrew Ferrier
 
http://www.stuff.co.nz/business/farming/7732135/Fonterras-8-2m-farewell-...

Surely shareholders should demand a properly accounted for response .. "wash up" just doesn't cut it.  Audited details of the individual performance targets referred to, the evidence that they were met and the dollar amounts attached to each corresponding meeting of them.
 
A "wash up" is nothing more than a "fob off".
 
Assert your shareholders rights - you own this cooperative.

Kat, Kate Kate, we are all mates in the dairy industry :-)   wouldn't want to rock the boat, could capsize, already looks a little low in the water.

If I did that the milk tanker wouldnt turn up for a day or to..............

Employment agreements are 'confidential' Kate ;-)

He made of with all the cream C/O

You have to pay the best to get the best AJ, that's what us progressive 'new generation cooperative' dairy farmers have learnt from the finance sector and corporate world. I wonder how Ferrias pay compares to the CEOs of Westland and Tatua?

Who cares you got the best, whats a few million amongst friends, I mean the head honcho and him. Now he has a new mate, whats he going to be worth when his time is up?
 I bet its more than your farm. It must be like taking candy from kids.

Well if we recruit the best AJ, I'm expecting some pretty mighty payouts going foward, and given our tax system I guess our farm will be worth a pretty penny, especially as we supply a cooperative whose focus is maximising return to farmer shareholders...ooopps.

Better remind your chairman about the maximising stuff, lots of high flyers have their eye on your pot of cream.  Someone could end up with,'the money and the bag'.

Besides I thought you already paid him 5 mill a year because he was the best, what the extra fert on the top for when he leaves, to help his self esteem?  I thought you used to give a gold watch.
Oh the irony of it all, my dairy farming mates are so tight they wont even buy a dishwasher for the wife or a decent raincoat, to busy to go the the beach. Good to see you know how to treat the boss though, no old coats for him, no 4am starts for him, no hes treaded like royalty.

I take it your mates don't go to the rugby then? I don't know if Gaynor is serious or taking the piss at the expense of the hayseeds!  http://www.nzherald.co.nz/brian-gaynor/news/article.cfm?a_id=14&objectid=10835692
 I'd sooner milk cows, it's more entertaining

Aw Aj, it's only 1 million a year for each year he was there. A drop in the bucket, mate. ;-)
 
Amusing to see that 'due to shareholder request' the Chair, CEO and chair elect are going to be doing a round of 'Account meetings'.  We used to have them, but haven't had them for years. Sounds to me like surveys are showing the chair elect to be unpopular, hence the need to parade him in front of the troops. As he is up for election, given that other candidates aren't being given the same opportunity, it smacks to me of unfair advantage.  Usually various directors front up at different meetings. Nicola Shadbolt is also a sitting director up for election and I see the same courtesy isn't being given to her either.  Henry really does need to go.

"Henry really does need to go."
 
Too little to late. CAP process and votes tied to production consistent with investor owned corp. Fonterra is the Fiji of the cooperative world in terms of election processes. What does it matter about Sir Henry? Isn't he just a puppet for politicians and the financial sector?

Wha' d I tell ya way back Omnologo...if they are thinking he needs to go now ...just wait a little longer...

Much to Ian Browns delight, Henry is hanging on to see TAF through, and to stick the boot in shall the co-op try to rise up.
http://www.radionz.co.nz/news/rural/116864/fonterra-chair-stays-on-to-see-scheme-through

So they tell the Co-operative  the TAF yes vote is in their best interests, they go on to tell the TAF voters they are Family and there will be no Corporate shenananigans, the payouts going forward will be relatively stable...the volatility of the NZD would have little bearing on pay out's  as they have reconfigured their hedge positions.....
And then your learn golden parachutes for average executives are now standard Farming practice...welcome to N.Z. inc....enjoy your stay you have been Corporatised.
Are you shitting me Henry....? ...true colours Henry , your out there now.

I hear you Christov. I also heard an interview with Theo on Checkpoint http://www.radionz.co.nz/national/programmes/checkpoint/audio/2533778/business-news-update.asx He mentioned farmers good grasp of supply and demand principles in understanding and accepting of the lower payout and our ability to 'breath in and out', meaning our ability to adjust operating costs to suit the payout. Easy as that.

The very best of luck to you Omnologo....I wish I could say keep the faith...you know what I mean ...
 All the Best.

Many thanks for your interest and comments Christov, all the best to you my friend.

Omnologo et al- What did you think of our benefactors email today in regards to blackout period meaning no update on profits, which is then promptly followed by 'tougher times ahead'?
 
Got me thinking my banker may have been on the money with his comment that $5.50 is optimistic and this seasons payout likely to be sub $5.

We don't see why retentions have been halved, unless to ensure payout level above 09/10 level. Does Fonterra suddenly not need funds..
Fellows seem to have no answer to Oz supermarkets earnings destructive activities.....
 
If shares are earning less, means they are worthlesser, hence business is worth lesser,
If business operations are earning less (ANZ), business is worth lesser
both either/or would suggest that some business assets (say intangibles) would need to be written off - so why not?
How can supplier shares still be same "value".
 
 

Oh what a tangled web we weave,
When first we practice to deceive
 
but a little practice ...

And practiced it is A.J. from the very top.......over many many years the interpretation of deceit practiced particularly within Corporate Structures and Governments , has been diluted to an almost justafiable means to gain positions of advantage deemed to be in the best interests of  .?....well ...right there the next wave of deceit begins......untill the perpetuated act becomes normalised......and the apathetic subscribe to the normality of deceit, while finding  the lack of ethics.......abhorrent..!
At the very point of 51% plus yes TAF vote, the normalisation of deceit was accepted...wittingly or not. 

 It stars with a bit of obfuscation, the next thing, you dont know which way is up, in the confusion you follow the guy yelling orders, the one who tells you he knows whats best, he called it TAF i think.
Then we have the TPP next on the agenda thats going to be a real doozie.  Come in spinner as my Aussie mates would say.

We've all been sucked in, important market pricing information was withheld from suppliers/voters in jan/feb/mar 2012 in order for fonterra to paint the perfect picture and push  the TAF vote thru. 
To drop the payout the way they did is nothing but criminal and added to the other criminals out there in the form of the IRD and their well above market stock values makes the dairy farmer nothing but a puppet on a string - if we don't see a lift in payout expectations by Xmas - provisional tax, extra shares, fuel costs, NAIT cost etc (not to mention debt servicing on $22/kgms) are going to sink a few ships............

Jeez grumpy...I thought all the suppliers were in for a golden handshake ....oh about $8,500000.oo

My cheque must still be in the mail??? - NZ Post is pretty slow these day you know......

Grumpy did U notice not a mention of China in the Asia roundup? They tout it as our saving grace, yet not a peep.

The accounts meetings could be interesting.

CO
Yeah look from my experience they are dealing with a highly risky customer - I used to here how wonderful China was going to be to make money in but now I hear how fu....in hard it is to get any money out.
Kiwis are known to be very good at giving their IP away to the detrament of of our homeland industries.
My gut feel is that this gobalisation trip the world has been on for the last 2 decades is going to come to a hard landing - whether its because of hyper inflation or the middle east who knows......
 

Interesting in that in the past we had always been told that off peak milk (shoulder milk) is extremely valuable to the company as it allows the factories to maintain high efficiency and the peak period production is usually sold by the time the Autumn shoulder milk comes on stream.
We have also had years of "the worlds running out of milk" "produce more at any cost".
Fonterras real problem is that the board are made up of very heavily financed (indebted) individuals who as a result of their own "debt burden" I believe do not make decisions that benefit "the average shareholder".
Their decisions are based on the short term benefits with no thought of the long term consequences (so that payouts as high as possible today so that they can service their extremelly high debt levels).
We have no long term strategic planners that can make decisions based on the long term survival of what can only be described as an absolute monster of an operation that few shareholders have any idea of how it really operates.
The fact that a number of our directors are tied up in offshore ventures which in turn have competted directly against their shareholders during times "of excess world milk production" clearly in my mine shows that our directors are not making the right decisions on our behalf.
 
 
 

no conflict, no interest
 

what a pack of doomsayers some of  the above writers are.!!
$6.40 to shared up farmers is a bloody good return in this current financial environment. bet theres some coal miners and bank staff out there wishing they had  our security .
8 mil to fonterra ceo is about right...westland and tatua ceo's dont deserve as much as they are much smaller  producers compared to fonterra .
and dont forget that  the low interest rates mean huge savings for indebted farmers...in my case equivalent to  $1.00/ kg/ms... .my bank has suggested I stop making principal repayments!!   

what a pack of doomsayers some of  the above writers are.!!
$6.40 to shared up farmers is a bloody good return in this current financial environment. bet theres some coal miners and bank staff out there wishing they had  our security .
8 mil to fonterra ceo is about right...westland and tatua ceo's dont deserve as much as they are much smaller  producers compared to fonterra .
and dont forget that  the low interest rates mean huge savings for indebted farmers...in my case equivalent to  $1.00/ kg/ms... .my bank has suggested I stop making principal repayments!!   

and dont forget that  the low interest rates mean huge savings for indebted farmers...in my case equivalent to  $1.00/ kg/ms... .my bank has suggested I stop making principal repayments!!  
 
Thanks mate I will have to reconsider were I put my deposits - care to name the bank so I can demand to move my money supporting your non-performing loan?

no need to name my bank...they are all awash with funds and out looking for more borrowers.

I thought not. Your type never want to realise the consequences of their actions.

`your type'  ..?    are we responsible for the banks being awash with funds?   I assume you have money invested as you have paid down your mortgage. why cant farmers do the sameand build a nest egg of savings as you obviously have?

Name the bank and let me out leaving the other sucker depositors to wear it if you are so confident.
 
As to type you believe you are an entitled borrower as far as I can ascertain from your comments above - But I wish to remove my capital from you and your like while I can - name the bank and be done with it.

Great to hear that cowhsit, just hold that thought a while and hopefully it'll be enought to carry you into a prosperous New year.
As I said the other day if your not milking cattle or Banking, you may well find yourself in need of a teat to suckle on.
 There is always the danger of putting your eggs in one basket, then counting your chickens before they hatch .
Are we encouraging a diverse economy...? I think not.... but so long as your all right jack, I guess that's the main thing.
 BTW....Corporate Fonterra are just getting warmed up on some of the bollocks your going to cop.

as a farmer that started in the dairy industry in the cream can days I am well used to bollocks....and often have a healthy sense of disbelief that the wrong decisions are being made. However I have no wish to go back to the hard work and low payouts of the '50s and '60's . The changes to the industry that are  happening now are probably no  greater than the changes made back then. 

stop worrying. your money is safe.  I am still making interest payments and I think you will find that  currently all banks are lending funds on farms. houses etc on interest only basis.
which bank are you with?

I am worried because the RBNZ is worried as I point out in the comments section of an article posted by Gareth Vaughan.
 
Banking analysts outline how they believe the big banks have been overstating their profits, enabling the over paying of dividends and erroneous benchmarking of executive bonuses
 
As to my banks, I recently had reason to pull money out of Rabobank - read the article and my comments below it. Your comments today make me think I should do the same with your lender.

stop worrying. your money is safe.  I am still making interest payments and I think you will find that  currently all banks are lending funds on farms. houses etc on interest only basis.
which bank are you with?

I dont think individual cash flows are as big a problem as the potential for a sharp correction in asset values, and thats what banks have been lending against.

Individual cashflows are likely to be down this season based on payout expectations and a higher NZ$. 
What most borrowers dont realise is that the rest of the western world is printing money which will end up creating inflation if not hyper inflation. 
 
NZ is one of the few countries not printing which means that our dollar is likely to climb as the money press works overtime offshore - the end result is likely to be a large lift in interest rates which NZ has no control off as we source our lending funds offshore.
 
The end result is likely to be a higher NZ$ resulting in subdued milk payouts, higher interest rates and issues for our very highly indebted dairy industry.
 
Exponential Growth in debt is not sustainable, do the maths guys, current NZ rural debt levels should still be reducing given the problems the world has at the moment. 
 

Thankjs for your analysis Grumpy appreciate your input. No worries about profit CO our senior execs are getting paid a pretty penny, so performance must be tickjing along nicely. Mention of the 'blackout period' email recieved from our chairmen, appears to be that most cooperative of principle 'keeping supplying shareholders in the dark. GDT going up, will that put pressure on profit....but what does it matter we own the coop and they maximise the value of our milk......dont they?

Come on cowshit .. there's more to your story than you're telling .. if you can remember the cream-can days then you've been around the paddock a few times .. and .. your enterprise should be debt free .. what are you paying interest on? It ain't the farm. Plane? Boats? A couple of Lamborghini's?, Antique car collection?

Land grab for incoming Chinese interests to pay a premium for....?
Iconoclast , youv'e a typo in Cowhsit.....?

Intentional Bulltish

in the cream can days I milked  80 cows ....now 6 times that....hard to grow any business  rural or urban without borrowng I would have thought. ? and yes I bought more land when payout and prices were high. Hindsight is wonderful aye.
whats with this anti-borrowing attitude?   without borrowers how would savers and lenders get a return on their  funds?
antique cars? .almost ...I have a 24yo  ute and a 13yo car. How did I reduce debt over  the past few years??  by not spending of course .
 

So .. what you are not saying is that you have increased your acreage substantially from the original "farm" by acquisition of additional farms. If you currently have $4 million debt then the acquisitions have been achieved later in your expansion program rather than earlier, and the gross value of your operation is probably around the $20 million mark.

His current gross value for a farm milking 480 (80x6) cows iconoclast is well short of 20million - less than half of that.

cowhsit
Based on the numbers youve put up youve either had debt written off by your lovely bank or were managed by the credit boys who have now reanalysised your financial position and reduced your interest rates by 50% or youve refinanced with a "new bank" whos book building and has sucked you in with a sweet short term interest rate.
Your in lala land if you think we are getting value from and $8m payout to our ex CEO - tell me why the new one is running around with a big hachett cutting costs at the moment - if ferrier was onto it he wouldnt have to do this.
In the real world Fonterra is widely known to only be run on a below average basis.  
If you think the world including NZ and yourself (by the sound of it) can continue to operate in the same way we have for the past 50 years then I'd suggest you get of the drugs you are on and open your eyes to what is really happening out there.

Agree: Compare what Hienz have done in response to the Oz supermarkest and what Fonterra has..
 

cowhsit
Based on the numbers youve put up youve either had debt written off by your lovely bank or were managed by the credit boys who have now reanalysised your financial position and reduced your interest rates by 50% or youve refinanced with a "new bank" whos book building and has sucked you in with a sweet short term interest rate.
Your in lala land if you think we are getting value from and $8m payout to our ex CEO - tell me why the new one is running around with a big hachett cutting costs at the moment - if ferrier was onto it he wouldnt have to do this.
In the real world Fonterra is widely known to only be run on a below average basis.  
If you think the world including NZ and yourself (by the sound of it) can continue to operate in the same way we have for the past 50 years then I'd suggest you get of the drugs you are on and open your eyes to what is really happening out there.
Your also show your lack of ability to understand the numbers - it is a fact that the 2011/12 payout of $6.40 is below the inflation adjusted price of milk.
To put it simply our milk price isnt keeping up with cost of inflation.

grumpy, you are wrong on all counts with reference to my mortgages and bank. I have never  had loans written off or missed interest payments.
2007 I locked in my mortgage of 4 mil into a 3 year term at 9.2%. I was paying over $1000/day in interest . I then floated for the last 2 years at an average of around 5.5%. The interest saved went to the bank as well as the benefits of the higher payouts since 2009.
I m not able to judge the 8mil to ferrier other than by comparison with other ceo's payments. his is less than telecom paid out.
in regard to the milk  price...of course we would like more but read my original comment....`given the current financial state (of the world) 6.40 is ok.'

2007 I locked in my mortgage of 4 mil into a 3 year term at 9.2%. I was paying over $1000/day in interest .
 
Sounds like you narrowly escaped a National Bank swap related lending deal - you obviously have made it your life mission to work for others and bloodly hard.
 
Just take a look at the three year US governnment note issue rates over that time 2007 - 2010 and decide for yourself if term interest rates were ever going to rise much above the 2007 levels. NB: US government /note bond rates direct the pricing of NZ government note rates and hence swap rates 
 
And if you are not convinced look at the trend in short term interest rates set by the Federal Reserve over the same period.

cowhsit
no worries mate - its good to see youve survived so far - watch out in the next round, it may harder than we all think. 

well mist42nz...to coin a phrase....if you know a better ' ole to be in please tell me.!

What's this talk of $6.40 milk payout. It's only $6.08 the $0.32 is paid on shareholding. Just saying.

Waikato dairy company Tatua has declared a bumper farmer milk payout of $7.50/kg milksolids for the 2012 season, putting dairy giant Fonterra's in the shade in a hark-back to industry payout rivalry of old.
In addition the specialist product company announced it was retaining pre-tax 54c/kg, implying it had enough in the kitty to make a $8 payout if desired.
http://www.stuff.co.nz/business/farming/7743831/Tatua-announces-payout
 
Adds context for many of comments above. Loved the could do more line....
 
and for us:
Tatua chairman Stephen Allen said the 54c/kg retention would ensure the company retained its financial strength in the volatile global economic climate.
as we thought....
 
 

Sterling result from Tatua.  Westland's wasn't bad either for the little battler.
 
Will be interesting to see when they revisit the raw milk part of DIRA if Tatua are still able to access their 50m litres of DIRA milk which they strongly believe they should be able to .  I wouldn't have a problem with them using it if they had an open door policy for supply, but while they refuse to accept supply and then claim DIRA milk quota their credibility diminishes some what. 
 
Meanwhile nothing changes at Fonterra.  Henry is staying on until commitments require him to leave mid next year, so he will still be firmly in control, despite any protestations from John Wilson.
TAF is a goer http://www.stuff.co.nz/business/farming/7743775/Fonterra-gets-green-ligh...
So roll on November, get TAF on the road and watch the future of Fonterra unfold.  If share price goes much above $6 watch the exodus of suppliers especially in Sth Is where Westland wants to get established over the hill.  I heard Henry may be the next chairman of Soprole - will suit him nicely - given his badly performing investments in Sth America. Ah, well, the more things change the more they stay the same. :-)

Plenty of money washing around for a few performance bonuses cowhsit. CO I heard Steve Allen speak at a Waikato Fed Farmers conference, and he gave a compelling arguement for Tatua to have access to milk at what he called a fair price. Prior to Fonterra, Tatua had an arrangement with one of the pre-exisiting cooperatives (I can't remember which), which allowed it to access a product used integral to their processing. Steve Allen didn't make a case for special treatment, but made a compelling case for fair access to product integral to their business. He also didn't advocate for DIRA in it's present form, unlike our puppet master who if I can paraphase said 'we can live with it'. Speaking to Tatua suppliers (who respect their chairman), they couldn't believe what Fonterra was proposing with TAF and why we even had a FVS.

Sorry, Omnologo, but while they have a waiting list of suppliers Tatua should not be allowed to access 50m litres of DIRA milk.  Saying they need access to fair price milk, when they have farmers wanting to join their co-op that they refuse entry to, strongly suggests that this 'fair price' = cheap. 
With regards to a particular product that is integral to their business, why should that not be on a willing seller/ willing buyer basis. Why should Fonterra subsidise Tatua?
 
A FVS is a requirement of DIRA.
 
You going to the Rotorua Accounts meeting on 10 October?

Good point CO. DIRA is a flawed and destructive mechanism to redistribute milk and wealth in the false guise of competition and efficient markets. The spotlight on 'accepted neoclassical economic dogma' since GFC and ongoing events, calls into question the motives of buerocrats and politicians that develop and maintain DIRA, although in many cases it's for their own means!! However our governance and executive and shareholding suppliers (in the form of production) support DIRA, so no pressure to change from Fonterra.
Recalling Steve Allens Fed farmers talk; prior to DIRA, Tatuas processing capacity was limiting, and their requirement for milk was seasonal complicated by specific product requirements. Subsequently they have invested alot in upgrading (note above retention in Henry_Tull post), and I take your point, maybe they should expand supply base. It would be nice if they came down Taupo way.
I suppose with Fonterra amalgamating what was left of independent cooperative processes that Tatua secured seasonal product from, plays into the hands of DIRA proponents and the competition arguement. I would like to think Tatua could have faith in Fonterra to supply required product at a fair market price without DIRA  distorting things, but I wouldn't trust our leadership (Fonterra) to have such goodwill with other cooperatives and farmers, and I suspect neither would Tatua.
I've got mixed thoughts on attending the accounts meeting, as pretty dispondent post TAF and don't know if a dissenting voice counts for much nowdays. I'm also understaffed, overstocked and in search of grass.
 
Tatua and Westland have nominal shares consistent with proven cooperative principles. A FVS undermines cooperative principles.

We were driving through Matamata yesterday, its looking a picture, and someone in the back asked does this mean a supply farm to Tatua is worth more that a neighbouring one that supplies Fonterra. If so by how mach, if not why not.
And where does Open Country fit in.
 

The total payout rather than the 19 percent drop in net-farmer payouts, net was $ 6.40 to $ 7.90 this season last year.
Regards,
ravi group builders

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