Thousands of farmers in New Zealand are being urged to reject and “consider very carefully” their voting decision on a major Fonterra deal.
Shareholders are voting this month to either accept or reject the sale of Fonterra’s consumer businesses to French dairy giant Lactalis in a NZ$4.22 billion deal, with a final result expected on October 30.
New Zealand First leader Winston Peters in an open letter to farmers in recent days said the proposition is of “critical importance to the entire New Zealand economy: selling iconic dairy brands like Mainland, Anchor, Kapiti and others to the largest dairy company in the world”.
“Farmers must consider this very carefully,” Peters said.
“The decision is yours. We caution you to think not of the short-term sugar hit from selling, but to the long-term security for their children, grandchildren, and country.
“Why? It is there in black and white. The sale terms provide everything you need to know: after three years Lactalis can terminate milk supply from Fonterra for Anchor and Mainland.”
Control
Peters has warned that under this deal, farmers “will not control the very thing that has underpinned your success for generations: quality”.
“Why would we expect Lactalis to offer any long-term security to New Zealand farmers? Every incentive is on Lactalis to do the opposite,” according to Peters.
“Why would we believe Lactalis would want to secure New Zealand milk for more than three years? If they do, why has Lactalis not offered a longer supply agreement?
“If they meant it, it would be in the deal. They want 10 years of your raw milk for their own brands, but only want your raw milk for three years for Anchor and Mainland.”
He said that the “short-sighted may have dollar signs in their eyes”, having heard that farmers “stand to have hundreds of thousands put in their bank account”.
He added that farmers have a choice and hopes “they will make the right decision”.
‘Next level’
Fonterra CEO Miles Hurrell has said that as the world’s largest dairy company, Lactalis has the scale required to take Fonterra’s brands and businesses to the next level.
“Fonterra farmers will continue to benefit from their success, with Lactalis to become one of our most significant ingredients customers,” Hurrell said.
Lactalis CEO Emmanuel Besnier said that with this acquisition, “we significantly strengthen our strategy across Oceania, Southeast Asia and the Middle East”.
“Combining the Fonterra consumer business operations and market leading brands with our existing footprint in Australia and Asia will allow Lactalis to further grow its position in key markets,” Besnier added.
