Our capital structure at a glance

Capital structure can be defined as the way a company manages the balance between its debt and equity to finance its activities, assets and growth.

As a farmer-owned Co-operative, we think about other things as well, like: how should the price of our shares be set; how can we give farmers flexibility with their capital; to what extent should non-farmers be able to invest in the Co-op; how much capital do we need to support our strategy, and more. 

Our capital structure review 

Our Co-operative is currently consulting with farmers on potential changes to our capital structure. This is part of a Board-led review that’s about making decisions together to help ensure:

  • the financial sustainability of our Co-op well into the future;
  • a sustainable milk supply; and
  • protection of farmer ownership and control.

In September 2021, the Board put forward a proposal to move from the current structure Trading Among Farmers to a new structure called Flexible Shareholding. The proposed changes are detailed in the farmer booklet Our Choice: A capital structure for a better future, together, which is available HERE. A presentation summarising the revised proposal is also available HERE.

The Flexible Shareholding structure is a progression on the preferred option put forward at the start of the consultation process in May 2021, but with key changes based on farmer feedback and further expert advice. A summary of that feedback was provided in July 2021.


Fonterra Farmers

If you’re a Fonterra farmer, see our meeting and webinar schedule via the Farm Source website.

Capital Structure Booklet

Download a printable version of the booklet here.

Next steps for the capital structure review

At this stage, the Board is aiming for a farmer shareholder vote at the Annual Meeting in December.

Farmers can provide feedback on the current proposal in the way that’s most convenient to them – whether it be during the farmer meetings or webinars that are scheduled, directly to a Director, via their Area Manager or Fonterra Co-operative Councillor, or through our Co-operative’s farmer communications channels.

The capital structure review also involves ongoing engagement with other groups such as the Fonterra Co-operative Council (formerly the Shareholders’ Council), the management company of the Fonterra Shareholders’ Fund, which communicates with unit holders directly, the Government, major banks and rural professionals.

Ahead of a vote, voting documents would provide farmer shareholders with everything they need to know to assess the proposed changes they would be voting on. The approval of 75% of votes from voting farmers would then be required.

As some aspects of our current capital structure are reflected in the Dairy Industry Restructuring Act 2001 (DIRA), any vote would be conditional on the necessary changes to legislation being passed.

We’ll be providing updates about the ongoing capital structure review on this page and via our usual communications channels.

A brief history of our capital structure


When Fonterra was formed in 2001, Co-operative shares were issued to farmer owners in proportion to supply. Our Co-op redeemed the shares of exiting farmers and those who reduced supply for cash at a value that was set annually by an independent valuer. When a large number of farmers exited or reduced supply (e.g., during periods of drought), our Co-op had to redeem those shares and pay out the value – known as “redemption risk”.

In 2012, we implemented the current Trading Among Farmers (TAF) structure, primarily to manage redemption risk. There are two key parts to TAF, which are illustrated below.

This is the farmer-only market where farmers trade shares in our Co-op between themselves. The introduction of this market and the other TAF amendments in 2012 meant that our Co-op no longer had to issue and redeem shares.

This is a managed investment scheme under the Financial Markets Conduct Act. It is listed on the NZX Main Board and on the ASX, and units in the FSF can be bought and sold by the public in the same way as any other listed security.

Units in the FSF give the holder access to the economic rights in a share (such as distributions or dividends). Like any member of the public, farmer owners can also trade units in the FSF.

Further information about our current structure can be found on pages 16-17 of the Consultation Booklet.


1st Consultation Booklet May 2021


Summary of Farmer Feedback July 2021


Summary of Alternative Farmer Proposals July 2021


2nd Consultation Booklet September 2021


2nd Consultation Booklet September 2021


Fonterra Constitution

The following documents were prepared as part of the introduction of Trading Among Farmers in 2012. They describe the arrangements at the time they were issued and have not been updated since then.


Trading Among Farmers Blueprint


Prospectus and Investment Statement


2013 Supply Offer