Latest / Best of Business / 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 · Best of Business

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  Speaker 1: You're listening to a podcast from News Talks be follow
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• 0:16
  Speaker 2: Signs are looking good for Fonterra's consumer brands. Sound off
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  Speaker 2: to the French getting the green light this morning. We'll
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  Speaker 2: know it around ten forty five. Gary Raymer is a
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  Speaker 2: Fonterra shareholder and supply joining us this morning. Morning, Gary, right,
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  Speaker 2: good to have you on the show. So what do
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  Speaker 2: you reckon? I mean, it seems like it's kind of
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  Speaker 2: a foregone conclusion. What's you'll read on it?
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  Speaker 3: Well, you can never say never, can you? But yeah,
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  Speaker 3: I'll hear a few farmers who tell me they're going
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  Speaker 3: to vote against it, but by a large majority it
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  Speaker 3: seemed to accept managements in the board's rationale for game
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  Speaker 3: to go and ed with it. What the sale is?
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  Speaker 2: Which Wray did you vote? Gary?
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  Speaker 3: Can?
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  Speaker 2: I ask?
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  Speaker 3: Oh? Yeah, more than happy to say I'll vote in favor.
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  Speaker 3: Why is One of the one of the typical points
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  Speaker 3: for me was that it is already seven percent of
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  Speaker 3: our milk going into into the brand's business. And I thought, so,
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  Speaker 3: it's not taking out a big chunk of our milks. Apply,
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  Speaker 3: you know, lack carters should want to source their milk
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  Speaker 3: eusewhere And I don't know why they would because they
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  Speaker 3: like our carbon footprint, which you know the same with
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  Speaker 3: newspapers and all these companies. They want to get our
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  Speaker 3: productcause we've got to lower carbon footprint for taking users
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  Speaker 3: as part of the marketing. So I don't think they'd
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  Speaker 3: ever walk away from our milk, but it was still
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  Speaker 3: affecting my consideration. But the other part too, I think
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  Speaker 3: it takes a lot of noise out of the farmer
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  Speaker 3: arena as well when we operate business for business rather
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  Speaker 3: than business consumer and and you know, there's a lot
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  Speaker 3: of other things farmers can deal without having to worry
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  Speaker 3: about whether people complain about the price of better.
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  Speaker 2: It's a very good point, one well made Gary. What
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  Speaker 2: do you think farmers are going to do with the proceeds?
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  Speaker 2: I mean there's a lot of there's a lot of
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  Speaker 2: on far cost increases that you've been wearing for years. Now,
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  Speaker 2: do you payoff some mortgage? You know, do you pump
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  Speaker 2: it back in? What happens to it?
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  Speaker 3: Yeah, I think there'd be a wide range of things.
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  Speaker 3: I think what do you need to remember as well?
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  Speaker 3: And what people need to remember? They think, oh, it's
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  Speaker 3: going to be a windfall for farming. Yes for some farmers,
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  Speaker 3: and may well be, but they'll be pretty long in
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  Speaker 3: the tooth. When Fonterira is formed, and I'm not one
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  Speaker 3: hundred percent clearing the numbers anymore, but we were roughly
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  Speaker 3: thirteen billion liters of milk and we've climbed over twenty
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  Speaker 3: billion liters. The share price when Fonterira was formed was
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  Speaker 3: four dollars a kilo and the climb to eight dollars
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  Speaker 3: a kilo. So a lot of that new milk was
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  Speaker 3: paid for made by shares, which farmers have to have,
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  Speaker 3: you know, one shear or used to have to have
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  Speaker 3: one shep for every kg, and milk follows. So that
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  Speaker 3: milk or that increased production was brought out between four
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  Speaker 3: and eight dollars a share price. So all this is
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  Speaker 3: the is returning to capital that some of those farmers
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  Speaker 3: probably paid four or six or seven dollars for and
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  Speaker 3: bringing it back down. And so they have carried it
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  Speaker 3: did in the balance sheet and now they're going to
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  Speaker 3: repay some of that debt because the share price has
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  Speaker 3: been a lot lower back up of six, but it
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  Speaker 3: will also drop back down. So you know, all of
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  Speaker 3: this is a replacing capital on the balance sheet that
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  Speaker 3: was there taken away, and then we'll be taken away
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  Speaker 3: again after after the distribution.
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  Speaker 2: Very great perspective. Thank you, Gary Raimer. Fonterra shareholder supply
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  Speaker 2: voted yes.
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