{"id":67560,"date":"2025-10-09T10:17:08","date_gmt":"2025-10-09T10:17:08","guid":{"rendered":"https:\/\/www.newsbeep.com\/nz\/67560\/"},"modified":"2025-10-09T10:17:08","modified_gmt":"2025-10-09T10:17:08","slug":"fonterra-hits-back-after-winston-peters-questions-4-2b-mainland-sale-plan","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/nz\/67560\/","title":{"rendered":"Fonterra hits back after Winston Peters questions $4.2b Mainland sale plan"},"content":{"rendered":"In an emailed response to the Herald, Fonterra said it had been engaging with farmers on the strategic rationale for the divestment for the past 16 months.<\/p>\n
The terms of the divestment proposal had been discussed in detail with farmers over the past few weeks through extensive farmer engagement activity.<\/p>\n
The terms of the supply agreements with Lactalis had also been publicly disclosed and shared with farmers.<\/p>\n
Among them was a raw-milk supply agreement with an initial term of 10 years, which automatically renews until terminated, with a 36-month notice period. <\/p>\n
There is also a global supply agreement (ingredients and other products) \u2013 with an initial term of three years, after which it automatically renews until terminated, also with a 36-month notice period. <\/p>\n
\u201cWe can also confirm there is no bonus payment for management team members tied to the completion of the transaction or outcome of the shareholder vote,\u201d the co-op said.<\/p>\n
The executive remuneration framework is disclosed in the annual report each year.<\/p>\n
\u201cThe board\u2019s decision to pursue this divestment is grounded in an understanding of how Fonterra earns farmers\u2019 returns on their milk and the capital they have invested in their farms and the co-op,\u201d Fonterra said.<\/p>\n
\u201cBy far we do this best through our global Ingredients and Foodservice businesses, which have consistently utilised the majority of farmers\u2019 milk and generated the majority of the co-op\u2019s returns through both the farmgate milk price and dividends.\u201d<\/p>\n
Fonterra\u2019s Consumer business has utilised only about 7% of Fonterra\u2019s New Zealand milk solids sold and has a four-year average return on capital of 3.0%. <\/p>\n
This compares to an average Ingredients return on capital of 11.5% and average Foodservice return on capital of 13.4%.<\/p>\n
Under the terms of the agreement with Lactalis, Fonterra will continue to supply raw milk, dairy ingredients and products to the divested businesses.<\/p>\n
This means it will still be Fonterra farmers\u2019 milk in brands such as Anchor.<\/p>\n
Fonterra said Lactalis will become one of Fonterra\u2019s most significant Ingredients customers who the co-op will work closely with through a long-term strategic partnership.<\/p>\n
Lactalis had outlined its attraction to the Mainland Group business and long-term partnership with Fonterra in the notice of meeting.<\/p>\n
\u201cThrough focused execution of our strategy, we are targeting an average return on capital of 10-12%, alongside the highest sustainable Farmgate Milk Price, if the Mainland Group business is divested.\u201d<\/p>\n
Fonterra has plans to invest up to $1b over the next three to four years in projects to generate further value through its Ingredients and Foodservice businesses, it said.<\/p>\n
\u201cUltimately, the decision to divest the Mainland Group business to Lactalis sits with Fonterra\u2019s farmer owners,\u201d the co-op said.<\/p>\n
The $4.22b sale will be put to shareholders at a special meeting on October 30.<\/p>\n
It\u2019s not the first time Peters has criticised Fonterra. In 2019, he also expressed disappointment over the sale of Tip Top.<\/p>\n
Jamie Gray is an Auckland-based journalist, covering the financial markets, the primary sector and energy. He joined the Herald in 2011.<\/p>\n
Listen and subscribe to the Today in Business<\/a> podcast \u2013 the top headlines from the NZ Herald business team summarised and delivered by an artificial intelligence (AI) voice as an easily digestible recap.<\/p>\n","protected":false},"excerpt":{"rendered":"In an emailed response to the Herald, Fonterra said it had been engaging with farmers on the strategic…\n","protected":false},"author":2,"featured_media":67561,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[3],"tags":[54328,17767,74,89,1863,8613,138,3311,54327,24571,12026,1888,7226,38117,42,4508,38118,13489,23394,43,6729,2170,26346,17146,37882,1133,2687,30203,40,38,41,39,1648,6728,80],"class_list":["post-67560","post","type-post","status-publish","format-standard","has-post-thumbnail","category-headlines","tag-54328","tag-42b","tag-after","tag-attack","tag-back","tag-billion","tag-business","tag-consumer","tag-coops","tag-decide","tag-farmer","tag-first","tag-fonterra","tag-frances","tag-headlines","tag-hits","tag-lactalis","tag-leader","tag-mainland","tag-news","tag-peters","tag-plan","tag-planned","tag-questions","tag-responded","tag-sale","tag-saying","tag-shareholders","tag-top-news","tag-top-stories","tag-topnews","tag-topstories","tag-transaction","tag-winston","tag-zealand"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts\/67560","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/comments?post=67560"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts\/67560\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/media\/67561"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/media?parent=67560"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/categories?post=67560"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/tags?post=67560"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}