John Stevenson: Fonterra Co-operative Council Chair says farmers are planning investments after Fonterra sale

Many Fonterra dairy farmers are planning to invest their upcoming capital return back into their farms.

The dairy co-op's been given the green light by regulators to sell its consumer brands to France dairy giant Lactalis for $4.22 billion.

Farmers will get back two-dollars a share, possibly by the middle of next month.

Fonterra Co-operative Council Chair John Stevenson told Mike Hosking that farmers will be trying to make the most of the money they receive.

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Episode Transcript

Speaker 1 (00:00):
The bills done. Fontira's consumer brands sale to like Tylus
or Lacta Leese is unconditional four point two billion average
farm against three hundred and sixty two thousand dollars. John Stevenson,
Fontira Cooperative Council Chair, is back. What was John? Morning
to you?

Speaker 2 (00:13):
Good morning Mite.

Speaker 1 (00:14):
That final vote that was held the other day was
ninety something percent. I mean the seemingly now know and unhappy,
everyone's laughing. It all worked out well in the end.

Speaker 2 (00:23):
Yeah, I think you know, farmers are really really happy
with the outcome and you certainly saw that in the
in the vote, and there's no doubt it's a good
time to be a Fonterira farmer at the moment.

Speaker 1 (00:33):
That is true. What do you reckon actually drive the vote?
Was it money or logic? The logic of the sale.

Speaker 2 (00:38):
Our farmers certainly engaged heavily in the discussions leading up
to the vote, and I think it's important to note
that the second vote was a confirmation of the payment.
The first vote that we had towards the end of
last year was or was heavily based on the rationale.
So you know, farmers a long term and thinking and
really engaged in that process. So what the ask any questions?

Speaker 1 (00:59):
Good? What's the feat all around the money? If you're
getting three sixty, what are you doing with that?

Speaker 2 (01:03):
Yeah? I think it's important to note there's varying degrees
of seholding amongst our farmers, but you know, we trade
on international markets. There's always volatility and what we do.
But the confidence that that money's coming is really reassuring
to farmers. There's no shortage of suitors for the capitals.
But you know, certainly what I'm hearing is that farms

(01:24):
they are often generational investments, and farmers love reinvesting into
their own businesses.

Speaker 1 (01:28):
That's encouraging the auctions so far this year five from five.
What do you make of it? I mean, is there
any end to this?

Speaker 2 (01:36):
Well? I think you know, as I mentioned, it's a
certainly a volatile place out there in the world. But
at the moment that you know, farmers are really encouraged
by those five positive auctions following the run of negative
actions at the end of last year. So you know,
we'll keep an eye on things, but the certainty of
that capital returns certainly encouraging for it.

Speaker 1 (01:55):
And of course you'd want the money in the city
and you want the money to be spent. But I
knowed last week that the the average you need eight
to fifty on average to make money as a dairy
farmer in this country. That means debts too high, isn't it?
Because eight fifty is a big number, isn't it?

Speaker 2 (02:10):
Eight fifty historically as a really big number. Mike, You
know we've seen costs go up, but as you mentioned
debt levels, you know we all carry a few bit
of debt. What I'm hearing from farmers is that they
have invested a lot in debt reduction in the last
sort of twelve to eighteen months. I'd expect that to
continue as well as as well as been alongside investment

(02:31):
in other areas well.

Speaker 1 (02:32):
Good stuff, John, nice to catch up with you. Go well,
John Stevenson, who's the ponteer Cooperative Council. Chit. It's a
good result all around.

Speaker 2 (02:38):
Isn't it. For more from the Mic Asking Breakfast, listen
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