Fonterra won’t seek outside equity

Fonterra chair Sir Henry van der Heyden has ruled out seeking outside equity for the company:

Fonterra will not go outside its farmer shareholder base to look for new capital to fund the co-operative’s growth, and will depend only on retained earnings and new entrants to the dairy industry to pay its portion of future ventures.

Speaking to reporters after a two-hour select committee hearing at Parliament, chairman Sir Henry van der Heyden emphatically ruled out Fonterra seeking new capital for growth.

“No. We’re a co-operative,” he said in response to questions on whether the dairy giant would pursue growth opportunities in the future.

People outside the industry might not be happy about that but farmers will be.

The risk with outside equity would be the non-suppplying shareholders would want to drive maximise profits by driving down the farm gate price of milk.

While the company is 100% supplier owned, their interests are safeguarded.

Competitors wouldn’t mind that though, they reckon the farm gate price is 40 – 50 cents a kilogram higher than it ought to be.

 

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