We have been watching Fonterra with some interest since the San Lu scandal. Initially we thought they shouldbe given the benefit of the doubt over how they handled the initial crisis. Now we think that the whole issue was handled badly.
Now this appears in the Agridata blog so we are beginning to feel some unease. And we wonder what is happening to shareholder confidence.
Manawatu/Rangitikei Fed Farmers VP Andrew Hoggard says Fonterra’s announcement it is considering raising $300 million won’t affect dairy farmers, but he is worried the co-operative is raising capital to pay the bills. Fonterra said in February it expects to offer senior retail bonds, with the ability to accept oversubscriptions. The co-operative said it intends to use any money raised for general business purposes, including working capital requirements.
Read more here
But it is this speculation in the final paragraph that is perhaps the most worrying.
Mr Hoggard said although concerned about the $300 million, there are other worries for dairy farmer shareholders. “We have heard that all Fonterra’s storage is full, meaning it is stockpiling product. That means it’s not selling.” He said these are worrying times for all farmers. “There will be serious belt tightening in the coming year as dairy farmers cope with the lower payout and have less money to use for any spending.
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