Around 8,000 farmers will share in a record payout following the sale of Fonterra’s consumer-facing business.

New Zealand-based Fonterra is distributing a total of DKK 20 billion to its farmer shareholders in the wake of the sale of parts of its business to Lactalis, writes LandbrugsAvisen.

The payout – which, according to the media outlet, is the largest single-day distribution in New Zealand’s history – includes ongoing milk payments, supplementary payments and an extraordinary bonus related to the divestment of the consumer-facing part of the business, Mainland, including brands such as Anchor.

Around 8,000 dairy farmers will share just under DKK 12 billion from the transaction itself.

Strategic shift towards B2B
The divestment marks a strategic shift for Fonterra, which is increasingly focusing on ingredients and business-to-business sales rather than value-added consumer products.

According to LandbrugsAvisen, the decision has broad support among shareholders, and the outgoing CEO points out that value creation will increasingly take place closer to the raw material.

“We don’t have anonymous shareholders. We have shareholders who are connected to the organisation, and if there is a better return for that capital on-farm than what we can deliver, then we should return it to those who can create more value with it,” says CEO Miles Hurrell in an interview cited by LandbrugsAvisen.

Investment and debt reduction
Part of the funds is expected to be used to reduce debt and invest in on-farm production.

At the same time, analysts point out that the payout comes at a time of relatively strong financial performance in New Zealand’s dairy sector – but also amid uncertainty linked to, among other things, rising input costs.

By Maja Løvstrup
Source: LandbrugsAvisen
Photo: Fonterra