Fonterra mulls equity partnership trust

Photo / Christine Cornege

Fonterra said it had started a consultation process to gauge interest in a proposed equity partnership trust for its farmers in New Zealand and Australia.

The trust would be a collaborative partner that would target investment - typically at a minority level - in farming operations, while enabling farmers to retain control of their farming business.

Fonterra's chief financial officer Lukas Paravicini said Fonterra would consult with farmers and potential investors over the next few months.

"Our aim is to provide greater financial flexibility for our farmers, and support sustainable milk production volumes through the ability to efficiently fund dairy farming in New Zealand and Australia," he said in a statement.

The trust is intended to complement, rather than replace, other forms of debt and equity funding.

Establishment of the trust was dependent on the consultation process, he said.

"We want to be confident that the trust would serve the interests of farmers and investors before proceeding," he said.

Fonterra said trust would be a vehicle that allows targeted investment in well-operated farms in New Zealand and Australia and a collaborative partner to supports New Zealand and Australian farmers in financing their dairy production.

It would also be way for investors can gain exposure the dairy sector, with the benefits of diversification across New Zealand and Australia, and across a variety of farming systems.

The trust would be a long-term partner for farmers aiming for farm ownership, or planning succession through to larger established operators.

It would enable farmers to access equity tailored to individual needs and growth ambitions, and to better manage earnings volatility, Paravicini said.