November 14, 2007

 

Political tension mars New Zealand's Fonterra expansion

 

 

New Zealand's billion-dollar dairy cooperative Fonterra may face a predicament on its expansion plans due to politics.

 

The Fonterra plans to list on the share market on Thursday (November 15) for a new capital structure for its international expansion.

 

Speculations circulate that the cooperative would seek to float on the New Zealand stock exchange.

 

However, several New Zealand political parties said they would oppose any legislation to allow the float.

 

New Zealand First, which is part of the multiparty government agreement, said in a statement Tuesday (November 13) that the listing would "lead to foreign control of Fonterra and would be the worst possible option for dairy farmers".

 

The Green Party, another party in New Zealand's government, said in a statement that it feared farmers would lose control over their products.

 

If the two parties were to oppose any enabling legislation, and the main opposition National Party also withheld support, any necessary enabling legislation would be stymied.

 

New Zealand's conservative opposition party said it would be guided by Fonterra's farmer-shareholders.

 

But many of Fonterra's 11,000 farmer shareholders have been vocal critics of any change to the company's capital structure, stating they would lose influence in the company.

 

Fonterra's operations are already on a "monopoly" basis under a special legislation. The company was formed in 2001 from a merger of New Zealand's Dairy Board and the country's two largest dairy companies.

 

The cooperative is owned by eleven thousand New Zealand farmer-shareholders and responsible for one-third of the international dairy trade, according to the Fonterra website.