Dairy News // september 27, 2011
3
news
No need for outside capital – Ferrier SUDESH KISSUN
Farmers deliver lactose-free fresh milk.
Page 19
Lifting nutrient efficiency on farm.
Page 28
Passing the baton.
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News........................................................... 3-20 Opinion..................................................... 22-23 Agribusiness............................................24-25 Management.......................................... 26-30 Animal Health.......................................... 31-36 Milk Quality ............................................ 37-44 Machinery & Products.......................... 45-50
FONTERRA FORMER chief executive Andrew Ferrier says the co-op does not need outside capital to grow its business. Strong profitability allows the co-op to pay farmers a dividend and retain “a sizeable amount” of capital for growth, he says. Ferrier, who stepped down last week, rubbished suggestions the co-op will be forced to open its share register to outside investors for growth capital. The co-op last week announced a record result for the 2010-11 year, pumping $10.6 billion into the economy. Ferrier says the lift in profit will allow Fonterra to retain capital while paying a good dividend. “The solution to capital for growth is retained earnings,” he told Dairy News. Increased milk production will also raise capital. Farmers need one share for every
“It’s perfect for the co-op: we keep 100% control and ownership in the hands of farmers and we generate enough capital on our own to invest.” kgMS supplied to Fonterra. The co-op’s board and Ferrier three years ago tried unsuccessfully to partially float the shares to raise funds. Shareholders soundly rejected the proposal. Ferrier now believes the co-op should not look outside for capital. “It’s rubbish that we will have to look to outside investors. TAF, which protects our capital and with additional capital from retained earnings, would give us a comfortable solution. “It’s perfect for the co-op: we
Andrew Ferrier and Henry van der Heyden face a hostile media conference after the Sanlu scandal broke in 2008.
keep 100% control and ownership in the hands of farmers and we generate enough capital on our own to invest.” Ferrier believes Fonterra is in a good position to grow its value added business. “A strong balance sheet gives us the ability to pursue investment opportunities when they come up.” The annual results show that
‘Sanlu was a stressful time’ THE SANLU scandal that rocked Fonterra in 2008 was the toughest time for Andrew Ferrier during his eight-year stint in the top job. Leading Fonterra through the New Zealand media reaction to Sanlu was a challenge, he says. And he believes the New Zealand media unfairly laid the blame on Fonterra.
“We had our people in China facing difficult times, they did the right thing all the way through a crisis that impacted the entire industry. Yet many members of the media somehow put the blame on Fonterra instead of where it belonged, on the criminals operating in the China supply chain. “For me it had two effects: it
Pioneer® brand Maize Silage :
was incredibly stressful; and it made me very proud I was out there batting for my teammates and sitting there and taking all the heat and defending what our people did.” The highlight for Ferrier has been the succession plan bringing Dutch dairy executive Theo Spierings to the chief executive role. Spierings starts work this
“ I wouldn’t farm
without it
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in 2010-11 the co-op retained 35c/share or $487 million. Fonterra farmers also bought $250m of extra shares to match increased milk production. In 2009-10 it retained $438m. Fonterra has used retentions to reduce debt. Its debt gearing ratio was 38.5% at July 31 this year compared with 43.6% at July 31 last year.
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week. Ferrier told the Fonterra board 18 months ago about his intention to retire in late 2011. Ferrier, who owns homes on Waiheke Island and in Auckland city, plans to spend time between here and his native Canada. He is eyeing investments including equity partnerships in the dairy industry.
“ With a stack of maize silage on hand I control the season, instead of the season controlling me. I wouldn’t farm without it.” Mark Henderson Dairy Farmer, Taranaki
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