Fonterra shares too expensive for farmers?

The grapevine tells us that more than 30 dairy conversions are underway in Canterbury and none will be supplying Fonterra.

The reason given is that the shares have become too expensive.

. . . Many councillors agreed the Fonterra Shareholders Fund unit price was too high ($7.25 on Friday) and that was stifling trading on the share market.

Brown agreed before the dairy council meeting in Waitangi last week unit fund trading was driving share value, because farmers hadn’t started trading yet.

“Only one half of the market is working at present,” he said, before the interim result is declared in March and the six-month moratorium, which began on November 30, is over. . .

Fonterra is facing stiffer competition from dairy companies which aren’t co-operatives and don’t require suppliers to buy shares.

Conversion is an expensive business and not having to buy shares is an easy way to reduce costs.

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