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 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 first phase of the consultation process ran from 6 May 2021 to 16 July 2021.

A number of changes are being considered to the preferred option that was initially put forward in the Consultation Booklet in May. A summary of the changes being considered as well as an overview of the farmer feedback received during the first phase of consultation is available HERE. A high-level overview of alternative proposals submitted by farmers is available HERE.

Fonterra Farmers

If you’re a Fonterra farmer, and you can submit your feedback via the link below.

Next steps for the capital structure review

The Co-op is committed to moving as quickly as it can through the capital structure review while also taking the time needed to consider all views.

Over August and September, we will plan to do surveys and run focus groups to ask farmers specific questions and test different aspects of the potential changes. Further information will also be provided on our long-term strategy, including the types of activities we will invest in, the returns we are targeting, and the measures against which we will track our progress.

The Co-op is expecting to present a more detailed proposal around the time of the Co-op’s annual results in late September for further consultation.

At this stage, the Board is aiming  for a farmer vote at the Annual Meeting, which will be held in December.

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