It’s the most fundamental change to Fonterra since its formation and is being lauded by the co-operative’s governors as a “game changer”.
The formation of the NZX50 listed Fonterra Shareholders’ Fund has allowed investors other than farmers exposure to New Zealand’s largest company and 10 months in it’s had a turnover of more than $1.8 billion worth of trades with more than 250 million units changing hands.
Fonterra farmers have been slower to operate in their own market, initially standing back somewhat agog at the hike in price from $4.52/share pre-TAF to Fonterra’s listing price of $5.50 and an immediate first day close price of $6.85. Since then it’s hit a height of $8.09 before settling back down to hover around $7.
TAF general manager Aaron Jenkins said farmers have now become more active in their market and overall both markets are operating as they should. By late September about 2385 accounts to trade shares via the Fencepost website had been opened representing about 2750 farms, Jenkins said.
But TAF isn’t just about trading shares. It has also delivered a stable capital base to the co-op, addressing its redemption risk and opening the way for what Fonterra calls flexibility for farmers. At the same time though it’s created some big challenges to supply growth thanks to the high share price.
Its impact has also been felt across a number of other sectors such as rural real estate and banking.
