Your Questions Answered cont...
12. What does putting compliance obligations on hold during consultation mean for farmers?
- This means that all supplying farmers holding a minimum of 1,000 shares, and exiting farmers that are selling shares over three seasons in accordance with the Constitution, are not required to buy or sell shares to meet the share standard for the 2021/22 season until a later date to be advised.
- Compliance obligations are also temporarily on hold for those farmers who have not yet met their Share Standard compliance obligations for the 2020/21 season. This is so that no farmers are required to trade for compliance purposes during the temporary cap, until a date to be advised.
13. What happens to delegated compliance trading during the consultation process?
- With compliance obligations on hold as explained above, delegated compliance trading will not be offered for this season. If a date for compliance is advised in accordance with the above, then delegated compliance trading will likely be offered at that time.
13. What about farmers on a Share-Up Over Time Contract?
- These farmers are not required to buy or sell shares to meet their relevant share up requirements for the 2021/22 season until a later date to be advised, as above.
- For farmers whose final year of their Share-Up Over Time contract is 2021/22, they can still submit a cease notice for the following 2022/23 season, even if they will not have fully shared up due to compliance obligations being on hold.
15. Can I sign a Share-Up Over Time contract starting next season?
- Yes, farmers will be able to apply from mid-December 2021 to supply the Co-operative under a Share-Up Over Time (SUOT) contract commencing next season. However, the terms of SUOT contracts will be on the basis that the contract ends when the new capital structure is effective, and the farmer shares up in accordance with the new capital structure instead.
- The existing SUOT contract options would no longer be offered if we moved to the Flexible Shareholding structure, although we would honour all existing contractual commitments.
16. Can I sign a MyMilk contract starting next season?
- Yes, MyMilk contracts commencing next season are available if you meet one of the eligibility criteria for MyMilk.
- The existing MyMilk contract options would no longer be offered if we moved to the Flexible Shareholding structure, although we would honour all existing contractual commitments.
17. If compliance obligations are on hold during consultation, why have you set a Compliance Date of 20 April 2022?
- Our Constitution requires a Compliance Date to be set before the start of each season. The formal Compliance Date for the 2021/22 season has been set as 20 April 2022, which is consistent with previous seasons. However, as explained above, farmers holding a minimum of 1,000 shares will not be required to comply with the Share Standard until a date to be advised
18. What does putting the purchase of units under the Contract Fee for Units Trust on hold during the consultation process mean for farmers?
- Under the Contract Fee for Units trust, the contract fee paid by a farmer under a Share-Up Over Time contract, or supplying MyMilk, is transferred to a trust and used to purchase units which are held on trust for the relevant farmer. Those units are then distributed to the farmer when the farmer needs to share-up under the contract, or for MyMilk suppliers, when they need to acquire shares to supply the Co-operative.
- The Contract Fee for Units Trust is a discretionary scheme we offer. The Trustee will continue to hold the 5c/kgMS contract fee on trust for the relevant farmers but given the consultation on capital structure changes, the Trustee will not apply that 5c/kgMS to purchase units to hold on trust for the relevant farmers.
19. What happens to the Contract Fee?
- The Contract Fee is set each season. It was set at 5c/kgMS for the current 2021/22 season and is still being deducted from milk payments and held on trust under the Contract Fee for Units Trust. However the purchase of units by the Trustee has been put on hold until a date to be advised by the Board.
- As part of the proposed changes, all units (and any cash) held on trust for supplying farmer owners under a Share-Up Over Time Contract would be distributed to them.
- Units held on trust for MyMilk suppliers would be distributed to them when they become a supplying farmer owner, which they could do at any time. If MyMilk suppliers choose not to transition to become a supplying farmer owner at the end of their contract term, the units (and any cash) held on trust will be forfeited to the Co-op. Once all units have been distributed or forfeited, the Contract Fee for Units Trust would also be wound up.