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. 

Capital Structure Consultation Booklet 

Download printable version here.

Our capital structure review 

Our Co-operative is currently consulting with farmers on potential options to change 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.

The announcement to start the comprehensive consultation process was made in early May and can be read here.

Further information about how we got to this point, how the consultation process is being run and what potential options we’re seeking farmer feedback on are included in our Capital Structure Consultation Booklet. Or, check out these Frequently Asked Questions or the Farmer Roadshow Presentation.

Fonterra Farmers

If you’re a Fonterra farmer, here are a couple of other important links:

Meetings and webinars

See the schedule for our farmer meetings and webinars.

Farmer Feedback

Share your views via our online form.

Next steps for the capital structure review

Over the coming months, farmers will have the chance to share their views through a series of meetings, webinars and other opportunities.

If the appetite for change remains, the Board will do further work to refine the preferred option or options and have a second round of consultation.

If the Board decides to seek change to our Co-op’s capital structure, it would likely aim for a farmer vote around the time of the Annual Meeting in November and the approval of 75% of votes from voting farmers would be required. If the preferred outcome is to buy back the Fund, it would also require the approval of 75% of votes from voting unit holders. 

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

We’ll be providing regular 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.


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