Progressive Turmoil

Its a big day for NZ’s dairy industry with (in person) voting on the 3rd and final step in Fonterra’s capital structure changes. I’ve already voted online so now I’m hoping that at least 75% of shareholders also agree that this is a good move.

Chairman Henry is being quoted as telling the physical meetings that the company could come under “acute pressure” if this move is not taken. I agree.

Today’s vote (if positive) will mean that farmers exiting the co-op, for example to supply a competitive dairy factory, will have to sell their Fonterra shares back to other farmers. The co-op won’t be standing ready to buy them. Among other things, this will give Fonterra permanent share capital for the first time ever.

It will make the co-op much more sustainable, financially at least. There is still a fair way to go in persuading farmers that its actually in their interests to be environmentally sustainable as well, but more on that later.

Update: 90% of farmers voted yes.

This news report caught me by surprise. John Key fronted up to the Federated Farmers annual conference, explained the rationale for the ETS and

was greeted politely and raised barely a ripple of anger. He was farewelled from the meeting with a standing ovation.

As a regular Straight Furrow reader, this surprised me.  Every week I read bleating & mooing from farmers about the ETS. And the Feds have until very recently been actively stoking these fires, along with ACT.

So how to read the warm reception for the PM that is visiting all this evil upon their homes, livelihoods and country? Did the Feds have no counter-arguments? Were they too polite to voice them? Or are they just resigned to the new reality?

Whatever. I support the ETS for agriculture. I hope the Feds get over themselves and focus on making NZ’s agriculture more sustainable. I especially hope the ETS helps us get the whole fertiliser/soil carbon nexus working properly and kick/manage our urea addiction.