By Alex Tarrant
Fonterra Shareholders' Council chair Simon Couper has resigned from his position, effective immediately, due to concerns he has over the controversial Trading Among Farmers scheme.
Couper told BusinessDesk he was not personally convinced that the scheme would meet the bottom line objective of securing 100 percent ongoing farmer ownership of Fonterra.
Following Couper's resignation, the Council issued a media statement saying it supported TAF after carrying out its own due dilligence on the scheme. The Council represents the co-op's 10,500 farmer shareholders.
Last month the Council would only go as far as saying it supported the "process" of Trading Among Farmers.
Fonterra yesterday announced it would tighten thresholds of TAF's 'shareholders fund', which is set to be created to allow outside investors buy non-voting shares in the co-op.
The capital raised through the new fund would be used to manage redemption risk, Fonterra has said. It is expected the size of the new fund will be at least NZ$500 million.
Concerns about foreign ownership of shares in the new fund, the potential size of the fund, and potential loss of 100% farmer ownership of the co-op saw Fonterra announce last month it would allow another farmer vote on June 25 on whether to go ahead with TAF.
Fonterra chairman Henry van der Heyden said the co-op regretted Couper's move.
“But if Simon is uncomfortable, he has done the right thing by the Co-operative. The Board is grateful to Simon for his eight years of service to Fonterra,” van der Heyden said.
He welcomed the Council's announcement that it supported TAF.
“When we are making such a significant decision to protect the Co-operative, it is important that the Board and Council are able to stand shoulder to shoulder. So the Board is delighted to have Council’s support,” van der Heyden said.
“When we announced the special meeting we said that we wanted to have this final vote to unify the Co-operative. With Board and Council unified on Trading Among Farmers we are now a long way down that track," he said.
See the release from the Fonterra Shareholders Council on Couper's resignation:
Simon Couper has resigned his position as Chair of the Fonterra Shareholders’ Council effective immediately.
Couper’s resignation came about due to his lack of comfort with some aspects of the Trading Among Farmers proposal.
The Council today endorsed Council’s Deputy Chair, Ian Brown to move into the position of Chair.
Ian Brown: “The Council would like to thank Simon for the dedication he brought to the Council over the past eight years.”
Later on Thursday the Council issued this release supporting TAF:
The Fonterra Shareholders Council, which safeguards the rights of the Co-operative’s 10,500 Shareholders, today overwhelmingly resolved to support the introduction of Trading Among Farmers (TAF), and in so doing stand alongside the Co-op’s Board of Directors when farmer Shareholders have their final vote at a special meeting on June 25.
The Council Chair, Mr Ian Brown said the Council had worked alongside the Board of Directors and the Board’s Capital Structure Committee for the past two years developing the TAF concept for implementation.
“The Council has been deeply involved at all stages and has also conducted its own due diligence process with independent advisors involved,” said Mr. Brown.
Earlier this week Fonterra’s Board gave its qualified view that the first four pre-conditions for the launch of Trading Among Farmers would be met, subject mainly to legislative changes and regulatory consents and confirmations. The fifth pre-condition revolves around the Shareholders’ Council providing its majority support.
Mr Brown said the Board needed to satisfy the Council that TAF will be implemented in substantially the same manner as set out in the TAF Blueprint.
“The Board will provide to the Council a final report showing how the pre-conditions have been met - prior to the Board and the Council formally resolving that TAF be implemented, which is likely to take place in July.”
Mr Brown said that throughout the deliberations during the past two years, one of the most important considerations has been the ultimate size of the Fonterra Shareholders’ Fund and how this might be structured to best protect the Co-op for future generations.
“As a result of these discussions considerable emphasis has been placed on the terms of the Fonterra Shareholders’ Fund Risk Management Policy which is described in the Blueprint, he said.
“The Board and the Council have been intent on ensuring that should the size of the Fund move through various thresholds appropriate action is taken to protect the Co-op. The final form of this Policy gives the Council a pivotal role in ensuring that the size of the Fund is closely monitored and appropriate action taken at the various thresholds.
“The Council is pleased that the Board has agreed to recommend to Shareholders that they enshrine this Policy in Fonterra’s Constitution.”
In addition, Shareholders will note that the Council’s right to nominate two members of the Milk Price Panel (including one independent) is also proposed to be enshrined in Fonterra’s Constitution.
Mr Brown said the Council has been focussed for the past months and throughout the due diligence procedure on ensuring that TAF would not threaten 100% farmer Shareholder ownership and control or the integrity of the Milk Price. That is why the two considerations outlined above are of significance in the final package.
“We are satisfied that the consultation and process undertaken over the past two years has been thorough and comprehensive.
“We now urge shareholders to get a good understanding of what is being proposed and to have your say on June 25.”
6 Comments
You could say that Alex, but it relates back to the fundamentally flawed economic policy advocated by the so called developed free market capitalist economies. Of course there's nothing free market about them, and they promote destructive and marginalising practice which is creating massive social instability.
http://www.converge.org.nz/watchdog/97/2.htm
Respect for Simon Couper for having the intelligence, integrity and courage in standing up to Henry van der Hayden and his fyfedom. Hopefully there is a chance TAF will be rolled despite the malarchy of shareholder endorsement and a unified cooperative. Alex this is very relevent in the debate around foreign capital and national soverignty we've had in the past. Once again I'll shout it out, this is bigger and more significant than the Crafer saga, this site needs to run with it, and may you mash down those financial glitterati Auckland hacks et al.
You guys really should have a good look at how the New Zealand Apple & Pear Board screwed itself with "ownership".
This is about how it went, but don't take my version as perfect but it is very close.
For several years a number of prominent growers argued for a tangible ownership share that recognized the individual growers stake in the assets, an allocation of shares, tradeable amongst growers only.
This would mean new entrants would be required to either buy share from an existing grower, or direct from the Board. You know how it all works!
During this process, the industry had become financially distressed. Bigger operators who had embarked on a "growth strategy" were amongst the worst affected.
So, the alleviate that "stress" the NZAPB (ENZA) cashed up it's old stabilization account & the next year sold off it's procession division Frucor Beverages, paying the "existing suppliers" out on the supply volumes of the previous 2 years...old stabilization dollars went to new growers! Frucor had been funded since day one from fruit submissions but was paid out to growers who had never contributed to it's capital cost.
Tough time remained as did the " stress" but now we were issued our lovely new " shares"!
Late one afternoon &into the evening, every grower received a phone call from a broker offering to purchase the shares. Tony Gibson had become a " Grower" by leasing a small orchard so therefore was able to by shares from other Growers.
Well bless his Broker's efforts, Gibbs had control of ENZA shares before dusk. It remained to call the small growers as the evening went on.
I could go on but I figure you will get the picture. Dont take my word as verbatim but it's very close to the actual. Go looking for the timeline, the ring leaders, the unfortunate " growers in the headlights" the winners &losers and you will make a case that if put in front of Daitry Farmers, TAF is F----d!
Maybe this is always the result of the street unwise producer " Director" rubbing shoulders with the wolves. Talk about easy pickings!
I dont think you have had it as bad as sheep farmers. We had the wool board and 40 million of investments annd we dont even know where it went. Then we had continuos stuff ups by the meat board that ended in SFF farms taking over Richmonds. Its been one giant cock up, just when you think they couldn't do worse they pull a rabbit out of the hat again. We even got a high court judge involved in the wool nightmare. Yet no one held responsible.
http://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=10637476
Im hopping Fonterra won't make the lot of us look like amateurs..
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