April 12, 2021

 

FrieslandCampina puts forward proposal for new future-proof member financing

 

The board of Zuivelcoöperatie FrieslandCampina UA has shared its proposal for future-proof member financing with its member dairy farmers on April 8, FrieslandCampina announced recently.

 

At the heart of the proposal is the linking of a significant part of members' capital to their milk deliveries and a cooperative solution for the tradability of free member bonds.

 

The new member financing system is necessary to ensure the future tradability of free member bonds, reduce imbalances in members' capital commitment and strengthen FrieslandCampina's equity.

 

Commenting on the changes, the chair of Zuivelcoöperatie FrieslandCampina U.A., Frans Keurentjes, said: "Over the past year and a half, we have had an extensive dialogue with our members and the Members' Council on the new member financing system. We have discussed the dilemmas as well as the starting points for possible solutions and asked them for their preferences. We are now presenting a proposal for new future-proof member financing that does justice to the diversity of our members and marks an investment in the future and continuity of our company, which adds value to our milk in the market."

 

FrieslandCampina proposes to issue €8 (US$9.51) worth of supply certificates per 100 kilos of milk delivered to its member dairy farmers. To determine the first issue of supply certificates, the quantity of milk delivered in the period from October 1, 2020 until September 30, 2021, will qualify. Members who have less than €8 per 100 kilos of milk in fixed member bonds and/or member certificates will be allowed to 'bed in' over a period of 10 years by means of a loan provided by the cooperative.

 

It is also proposed that the cooperative will solve any imbalances in the internal market of free member bonds within its own membership circle.

 

The proposal will strengthen FrieslandCampina's foundation, as the capital, in the form of supply certificates, will contribute to the company's buffer capital. Once the supply certificates are introduced on January 1, 2022, it is proposed that the Balanced Growth scheme will be discontinued.

 

In connection with the introduction of delivery certificates, FrieslandCampina proposes to adjust the company's retained earnings policy as well. The current retained earnings policy consists of a supplementary cash payment of 35% of the profit, 10% in member bonds and to add 55% to the retained earnings. The provisional proposal will pay out 40% of profit over the financial years of 2021 and 2022 as a supplementary cash payment and add 60% to retained earnings.

 

During the spring members' dialogue, members will be asked for feedback on this proposal before the Members' Council makes a decision.

The spring members' dialogue, during which members can ask questions about the proposal and express their opinions, will start on April 12, 2021.

 

Decision-making on the new financing system is scheduled for June 16, 2021. If approved by the Members' Council, the system will apply as of January 1, 2022.

 

- FrieslandCampina