Dairy farmers have voted overwhelmingly to restructure their cooperative Fonterra in a move aimed at ensuring milk supply and farmer ownership and control.
The proposed restructure would make it easier for new farmers or sharemilkers to acquire shares, but the Agriculture Minister also fears it opens the cooperative to a split.
It will be its biggest restructure in a decade.
"We come out of this as a united cooperative," says Peter McBride, Fonterra chairperson.
"It really demonstrates how important the topic was to farmers and their belief in the company."
Eighty-five percent voted to reduce the number of shares farmers need to become a member. Under the new structure, farmers will need a share for every three kilograms of milk solids they produce.
Before it was one for one, setting the bar too high for around 4000 small players, including sharemilkers.
"One of the key planks for our investment is unsustainability, so without changing our structure we would have struggled in that regard," says McBride.
Surveys show dairy farmers are increasingly tempted to switch to other potentially foreign-owned dairy companies where they don't have to invest as much capital.
"The more we can do to maintain that and ensure that a strong farmer-owned cooperative is enduring the better," says James Barron, Fonterra shareholders council chairperson.
"This vote enables them to have a better chance at keeping milk supply, you know, in the hands of a New Zealand-owned cooperative," says Arie Dekker, Jarden Research head.
The proposal still needs the Government's sign-off. Agriculture Minister Damien O'Connor has told Fonterra it could create a split between large shareholders and small ones.
"Some farmers will hold less shares and the natural buyers of that might be larger buyers. Of that will be stronger corporate-type farmers and the Government is concerned that there might be a misalignment in the interests," he says.
But it doesn't necessarily guarantee the future of the cooperative. Everyone agrees that'll be down to Fonterra as a whole when lifting its performance.
