Fonterra’s announcement today confirms fears its capital restructure would leave the co-operative and its farmer shareholders fighting over ever decreasing payouts, Labour’s Primary Industries spokesperson Damien O’Connor says.
“The dilemma for Fonterra is whether to reduce its debt or help its struggling farmer shareholders.
“The historic ability of co-operatives to share the risks and rewards between shareholders has been disrupted by Fonterra’s restructure. The company now faces a risk to its supply which will result in a redemption risk as farmers are forced to liquidate their shares to stay afloat.
“The Prime Minister and the National Government have been happy to hype the dairy industry as the way to a better future.
“Their lack of vision and diversification for our economy now threatens to drown them in so called white gold.
“Unfortunately for too many trusting dairy farmers, the reality of the Government and Fonterra’s lack of foresight and accurate projections will result in major hardship across many rural communities.
“Being up the creek and fighting over the paddle will not help farmers or Fonterra pay down debt that now threatens to sour the rural economy,” Damien O’Connor says.