Latest / Early Edition with Ryan Bridge / Garry Reymer: Fonterra Shareholder and Supplier talks about the company's major sell off

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Garry Reymer: Fonterra Shareholder and Supplier talks about the company's major sell off · Early Edition with Ryan Bridge

• 0:00
  Speaker 1: Signs are looking good for Fonterra's consumer brand sail off
• 0:02
  Speaker 1: to the French getting the green light this morning. We'll
• 0:05
  Speaker 1: know it around ten forty five. Gary Raymer is a
• 0:09
  Speaker 1: Fonterra shareholder and supply joining us this morning. Morning. Gary, right,
• 0:13
  Speaker 1: good to have you on the show. So what do
• 0:15
  Speaker 1: you reckon? I mean, it seems like it's kind of
• 0:17
  Speaker 1: a foregone conclusion once you'll read on it.
• 0:21
  Speaker 2: Well, you can never say never, can you? But yeah,
• 0:26
  Speaker 2: I hear a few farmers who tell me they're going
• 0:29
  Speaker 2: to vote against it, but by a large majority it
• 0:32
  Speaker 2: seemed to accept management in the board's rationale for games
• 0:37
  Speaker 2: to go and ed with it with the sale.
• 0:39
  Speaker 1: Yes, which way did you vote?
• 0:41
  Speaker 2: Carry?
• 0:41
  Speaker 1: Can?
• 0:41
  Speaker 2: I ask? Oh? Yeah, more than happy to say I'll
• 0:44
  Speaker 2: voted in favor. Why was one of the one of
• 0:50
  Speaker 2: the tipping points for me was that it is only
• 0:55
  Speaker 2: seven percent of I'm not going into into the brand's business,
• 0:58
  Speaker 2: and I thought, so, it's not taking out a big
• 1:01
  Speaker 2: chunk of our milks. You know that parts should want
• 1:04
  Speaker 2: to source their milk elsewhere, and I don't know why
• 1:06
  Speaker 2: they would because they like our carbon footprint, which you know,
• 1:10
  Speaker 2: the same with newspapers all these companies they want to
• 1:13
  Speaker 2: get our product because we've got to lower carbon footprint
• 1:15
  Speaker 2: for taking users as part of the marketing. So I
• 1:17
  Speaker 2: don't think they'd ever walk away from our milk, but
• 1:20
  Speaker 2: it was still affected in my consideration. But the other
• 1:25
  Speaker 2: part too, I think it takes a lot of noise
• 1:29
  Speaker 2: out of the farmer arena as well when we operate
• 1:32
  Speaker 2: business for business rather than business consumer and there's a
• 1:36
  Speaker 2: lot of other things farmers can deal without having to
• 1:38
  Speaker 2: worry about whether people complain about the price of better.
• 1:43
  Speaker 1: It's a very good point, one well made.
• 1:45
  Speaker 2: Gary.
• 1:46
  Speaker 1: What do you think farmers are going to do with
• 1:48
  Speaker 1: the proceeds? I mean there's a lot of there's a
• 1:50
  Speaker 1: lot of on farm cost increases that you've been wearing
• 1:53
  Speaker 1: for years. Now, do you pay off some mortgage you know,
• 1:57
  Speaker 1: do you pump it back in? What happens to it?
• 2:00
  Speaker 2: Yeah? I think there'd be a wide range of things.
• 2:04
  Speaker 2: I think what do you need to remember as well?
• 2:05
  Speaker 2: And what people need to remember. They think, oh, it's
• 2:07
  Speaker 2: going to be a windfall for farmers. Yes for some farmers,
• 2:10
  Speaker 2: and may well be, but they'll be pretty long in
• 2:12
  Speaker 2: the tooth. When Fonterira is formed and I'm not one
• 2:16
  Speaker 2: hundred percent clearing the numbers anymore, but we were roughly
• 2:21
  Speaker 2: thirteen billion liters of milk and we've climbed over twenty
• 2:23
  Speaker 2: billion leads. The share price when Fonterira was formed was
• 2:27
  Speaker 2: four dollars a kilo and the climb to eight dollars
• 2:30
  Speaker 2: a kilo, so a lot of that new milk was
• 2:35
  Speaker 2: paid for backed by shares which farmers have to have,
• 2:39
  Speaker 2: you know, one shear or used to have to have
• 2:41
  Speaker 2: one shep for every kg, and milk solis, so that
• 2:44
  Speaker 2: milk or that increased production was brought out between four
• 2:48
  Speaker 2: and eight dollars a share price. So all this is
• 2:51
  Speaker 2: doing is returning to capital that some of those farmers
• 2:53
  Speaker 2: probably paid five or six or seven dollars for and
• 2:56
  Speaker 2: bringing it back down and say they have carried that
• 2:58
  Speaker 2: death in the balance sheet and now they can repaid
• 3:02
  Speaker 2: some of that deck because the share points has been
• 3:05
  Speaker 2: a lot lower. It's back up of six, but it
• 3:07
  Speaker 2: will also drop back down. So you know, all of
• 3:10
  Speaker 2: this is are replacing capital ont of balance Hee, there
• 3:12
  Speaker 2: was there taken away and then we'll be taken away
• 3:16
  Speaker 2: again after after the distribution.
• 3:18
  Speaker 1: Very great perspective. Thank you, Gary.
• 3:21
  Speaker 2: Raymer.
• 3:21
  Speaker 1: Fonterra shareholder supply voted yes. For more from Early edition
• 3:25
  Speaker 1: with Ryan Bridge.
• 3:27
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• 3:30
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