KEY POINTS:
Dairy farmers have had their first look at Fonterra's preference for a new capital structure.
If approved, the move will see the co-operative remain but a new company formed which would own all the assets and be listed on the stock market.
Dairy Farmers of New Zealand chairman Frank Brenmuhl says initial reaction is mixed.
Farmers in Christchurch - at one of seven satellite-linked meetings to unveil the plan - seemed generally un-surprised by it and some were supportive of the concept.
"I think it's better than what I thought it was going to be. I think it's probably quite acceptable," said one.
There is a long way to go - two years of consultation and two shareholder votes.
However, farmers need to make good use of the time and arm themselves with all the information they need to make the crucial decisions.
"Time's one of those things that goes quicker than you think," Brenmuhl says.
And he's right. The first vote to create the new company - albeit still fully owned by farmers at that stage - is due next May.
Considering the importance of Fonterra to the economy - 95 per cent of all dairy exports and $13.9 billion in revenue last year - it's important to all of us that farmers have all the answers they need to make a choice they firmly believe to be right. Whether it's yes or no to the preferred plan.
It's not a time for hunches or hurried decisions.
The board have said they are open to feedback and amendments, but they don't want to compromise on strategy, and chairman Henry van der Heyden says his commitment to the outcome should not be underestimated.
It sounds as if farmers may be able to adjust the speed of the milk truck and tweak the road positioning, but the board doesn't want them changing lanes.
"Your board is telling you that we can't stand still," van der Heyden says. "If we get paralysed by this challenge, we will destroy value."
There are lots of issues to sort out along the way, including milk pricing to keep both investors and farmers happy and share valuation, but in the end it will probably come down to farmers' appetite for the board's strategy.
The company - already the fifth-biggest dairy business in the world by revenue - says it needs to restructure to ensure funds for future global growth.
"We have the opportunity to become a truly global dairy company," van der Heyden says.
Chief executive Andrew Ferrier adds: "We're facing significant opportunities to create value, and the biggest growth opportunities we are seeing are around fresh milk and behind borders."
Fonterra is enjoying good times. Dairy commodity prices have boomed, revenue was up $881 million last year and the forecast payout to farmers this season is a record $6.40 per kilogram of milk solids, up from $4.46 last season.
"While $6.40 is good for farmers, it doesn't give your co-operative the capital to implement our strategy," van der Heyden says.
Van der Heyden has been clear that if farmers say no to capital restructuring, then the strategy would have to change.
So in the end a hugely complex process could boil down to one simple question. How much do New Zealand's dairy farmers want global expansion?
We're about to find out.
PIG HEALTH
Draft health standards from the Ministry of Agriculture and Forestry for pig meat has got Federated Farmers worried that relaxing import rules could let a devastating animal virus breach the border.
Federated Farmers meat and fibre industry group chairman Keith Kelly says: "Farmers, many of whom keep pigs, are concerned that the draft standards are another step towards less controls on imported pig meat, increasing the chance that porcine reproductive and respiratory syndrome will arrive in New Zealand."
There was concern about the risk of feeding waste containing uncooked meat to pigs should import rules be relaxed, Kelly says.
"PRRS is a massive problem for pig producers overseas, and we do not want this virus in New Zealand."
IMPORTS UP
Better country-of-origin labelling could boost demand for locally grown produce, says Horticulture New Zealand.
HortNZ chief executive Peter Silcock says mandatory country-of-origin labelling is the only way to make sure consumers can make the choices they want.
Statistics New Zealand data sourced by HortNZ show that last year $2 billion of food was imported, including $580 million of fresh or processed fruit and vegetables - $50 million of which came from China.
"We know that consumers are quite concerned about the issue, but the information they're getting at the moment is far from ideal really, and a lot of the time there is no information at all," Silcock says.
"Just because something comes from China doesn't mean it's unsafe but consumers should be able to make those choices."
Imports have risen considerably since 2000 when $1.3 billion of food was imported, including $412 million of fresh or processed fruit and vegetables.
Better labelling could boost demand for local produce among New Zealanders wanting to buy homemade, Silcock says.
"We see that accurate country-of-origin labelling would have some benefit to our members because people want to buy New Zealand product and a lot of the time they're not aware that they're buying imported product.
"They assume that it's local, and I guess our comment is you can't assume that now with so much food being imported."
Imports of jam and marmalade from China totalled 535,000kg last year - more than five times the 2003 total of 102,000kg.
A lot of labelling identifies produce as made from locally and imported ingredients, Silcock says.
"I think that's pretty questionable what that actually means a lot of the time."
November is National Fruit and Vegetable Month and HortNZ is using the occasion to call on the Government for tougher labelling.
There is greater interest today in what we eat, including colours, preservatives, artificial flavours - whole dictionaries of e-numbers on some products - clear origin could be another on the list.
We use "made in New Zealand" as a selling tool abroad, why not use it more at home?
Cost is the often the key driver for shoppers on a budget, but clear origin labelling would help them better weigh up those decisions.
Local produce might be cheaper and sometimes might involve paying a premium - but if it was easy for people to find out that the premium was because something was locally made, then a little extra cost is easy to justify.
A system of fern-emblem stickers for products - food or indeed any other sector that qualify as truly Kiwi made - would be an easy visual tool for shoppers.
INSECT KILLER
AgResearch has discovered a new strain of bacterium that will kill many insects within two or three days.
The bacterium - with the suitably terrifying name Yersinia entomophaga MH96 - is significant because it is deadly against a wide range of crop-destroying insects, including beetles, grass grub, moths and caterpillars, AgResearch says.
AgResearch Scientist Mark Hurst says the bacterium has evolved over countless years and is highly tuned to killing insects.
It is ready to be marketed as a commercial product after more than 10 years of refinement and securing patents since its discovery in 1996. Yersinia entomophaga MH96 evades the immune system and barrages its host with highly potent toxins.
"I can see significant appeal for Yersinia entomophaga around the world as the demand for environmentally friendly control versus the use of insecticides continues to grow," Hurst says.
AgResearch chief executive Andrew West says: "This is exactly the sort of investment in research and development that will make a valuable contribution to the economy."
Bugs be warned.
