Peters Proposes Regulation Over Fonterra’s Sale to Lactalis

Winston Peters, leader of the New Zealand First party, has threatened to push for increased regulation of the dairy cooperative Fonterra if it proceeds with its plans to sell its well-known brands to the French company Lactalis. The sale, estimated at over $3.8 billion, includes Fonterra’s retail brands such as Anchor and Mainland. With additional assets from Fonterra’s Australian operations, the total sale could exceed $4.2 billion.

Peters expressed his concerns in an open letter directed at farmers, urging them to reconsider the implications of the deal, which is expected to be finalized in the first half of 2024, pending approvals from farmer shareholders and regulatory bodies. He highlighted a significant clause in the sale terms, stating that after three years, Lactalis could terminate the milk supply agreement for the Anchor and Mainland brands, potentially jeopardizing farmers’ control over their key assets.

Farmers’ Rights and Political Reactions

In his letter, Peters warned, “Farmers, under this deal you will not control the very thing that has underpinned your success for generations: quality.” He suggested that if the sale moves forward, it may necessitate a reevaluation of the regulatory framework governing Fonterra, particularly in light of recent relaxations of rules requiring the dairy giant to sell a portion of its raw milk to other New Zealand producers.

Fonterra’s chairperson, Peter McBride, defended the sale, asserting that farmers have invested significantly in the company over the years, and this transaction represents a return of capital that could be reinvested in regional New Zealand. He noted that even a smaller farm producing 100,000 kg of milk solids annually could expect a payout of around $200,000 from the deal.

Prime Minister Christopher Luxon responded to Peters’ comments, stating, “Politicians shouldn’t be telling farmers what to do.” Luxon emphasized that the decision regarding the sale lies ultimately with the farmers, who are capable of making informed choices without political interference.

Deputy Prime Minister and ACT party leader David Seymour echoed this sentiment, indicating that it is up to Fonterra’s shareholders to determine the direction of the company, underscoring that New Zealand is not a socialist nation. “Fonterra is a company owned by Fonterra shareholders. It’s up to them,” he said.

Concerns Over Fonterra’s Leadership

The Labour Party has described the potential sale of “iconic Kiwi brands” as a regrettable move but reiterated that the ultimate decision rests with the farmers. Peters has been critical not only of the sale but also of Fonterra’s leadership, accusing them of lacking transparency and failing to adequately communicate with stakeholders. He has called attention to the absence of Fonterra executives in discussions surrounding the sale, questioning their commitment to the farmers they represent.

“Where is the Fonterra executive? They have not been open and upfront,” Peters wrote, criticizing the perceived negligence of Fonterra’s leadership in addressing serious questions regarding the transaction.

Peters also mentioned that Fonterra executives had declined opportunities to present their case before select committees, which he characterized as a lack of accountability. He emphasized that Fonterra’s existence is rooted in legislation that established its regulatory environment and suggested that the company’s approach could be seen as complacent.

The ongoing discussions around the sale and the implications it carries for New Zealand’s dairy industry continue to elicit strong reactions from various stakeholders. As the timeline for the sale approaches, farmers and political leaders alike are left to navigate the complex landscape of agricultural business and regulatory oversight.