CAPITAL STRUCTURE CONSULTATION 2021
2. Why we’re proposing changes
The environment in which we’re operating has changed a lot since Trading Among Farmers (TAF) was implemented. Our current structure was put in place in 2012 when New Zealand’s milk supply was growing rapidly. Now, we face a different reality where
Getting our capital structure right is critical to helping ensure the financial sustainability of our Co-op. We’ve evolved our structure before, and it’s important we keep evolving it as things change. This section summarises why we believe it’s time to evolve our capital structure. The issues outlined are covered in more detail in Section 4 “How we got to this point.”
This is due to factors such as climate change impacts, regulatory changes and alternative land uses. These factors might not have fully impacted us yet, but we expect this to change over the next five to ten years. Having a sustainable milk supply is critical for us continuing to deliver on our current strategy, which is all about prioritising New Zealand milk. There are elements of our current structure that are challenging for a number of farmers now, or that may create challenges for our Co-op in a flat or declining milk supply environment. These are explained overleaf, and in more detail on pages 22-23.
we need to be prepared for a flat or potentially declining milk supply environment across New Zealand in the coming years.
NZ MILK SUPPLY (KGMS MILLIONS)
2,000
1,800
1,600
1,400
1,200
1,000
800
600
400
200
0
New Zealand Milk Supply Fonterra Milk Supply
4
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