Past decisions are coming back to haunt shareholders in Fonterra and Silver Fern Farms, meaning farmers may have to give up some ownership of the dairy and meat co-operatives.
The companies are in the process of capital restructuring which, in the case of Silver Fern Farms (SFF) and potentially for Fonterra, may mean shareholders' giving up some ownership to attract outside capital.
This stems from historical investment decisions and an unwillingness - or an inability - among shareholders to invest in their co-operative.
But, like all businesses, SFF and Fonterra have been caught by the banking squeeze as it chokes off access to bank debt, their primary source of funding.
Despite directors' continually warning shareholders that bank funding was drying up, many farmers believed they must retain ownership, that outside capital was not needed and that non-farmer ownership was evil.
SFF sold its proposal on investing in marketing, new technology and reducing debt, but it meant the contentious loss of total farmer ownership, even though majority voting power has been enshrined in farmer-suppliers.
But that compromise has sharebrokers warning outside investors would not view it favourably, as they would have no say in how the company was run.
Fonterra has a strategy of expanding its business, particularly overseas, but shareholders have demanded the dairy co-operative maximise its milk price, leaving little to invest in its strategy or its future.
The failure of an earlier capital structure debate showed they did not want to relinquish any ownership.
Observers call Fonterra's business model a "pass-through" structure, where all the profits are returned through a maximised milk price.
This has been at the expense of retained earnings.
Lincoln University's head of farm management and agribusiness, Keith Woodford, said just once since it was formed in 2001 had Fonterra retained earnings; and on at least two occasions, in its first year and then later when it cancelled peak notes, the dairy company had paid out more for milk than it earned.
As a result, the debt-equity ratio has been declining, nudging 60%, but efforts were under way to reduce it to 50%.
SFF's problems date back to its protracted and costly takeover of Richmond.
Sources have told the Otago Daily Times that banks asked PPCS, as it was known then and at the time the country's strongest meat company, to bail out the financially ailing Richmond.
But, rather than taking a cornerstone shareholding, it reached a point of no return, having legally to buy it outright.
Prof Woodford said SFF had dug a hole from which it could not extract itself and last month's vote to allow outside investment while farmer shareholders retained control was the financial consequence of those earlier decisions.
"Basically, they got caught out. They never intended to go 100%, but ownership was forced on them by the courts - go 100% or get out."
While describing SFF's solution as "well crafted", Prof Woodford said allowing outside capital in what was a hybrid model would eventually lead to demutualisation.
"In the long run, hybrids tend to be a journey to somewhere else, an interim measure as tension grows between farmer-suppliers and investors."
But that tension would not be as great in the competitive meat industry as the dairy industry, where Fonterra's dominance meant it set the milk price.
Should it float a part of the company, it would need to prove to shareholders its milk price was fair, while also meeting investors' dividend expectations.
Prof Woodford said a pure co-operative was still a realistic business model, so long as shareholders were happy to reinvest in the company.
The Alliance Group started as a co-operative, became a hybrid and then reverted to a co-operative.
Chairman Owen Poole recently told shareholders it was founded as a co-operative nearly 50 years ago with a plant at Lorneville in Southland, but had grown into one of the largest sheepmeat companies in the world.
It grew organically and through acquisition, but in 1990 it bought Waitaki International's South Island assets and, in the process, came close to collapse.
Mr Poole recalled that in the 1990-91 financial year, the company reported a $152 million loss, half of which was a one-off charge against its operating balance.
The hybrid company, 33% owned by corporate investors, was forced into survival mode.
Non-core assets were sold, the business was rationalised, and the focus shifted to growing cashflow and profits, and strengthening its balance sheet.
Mr Poole said the hybrid model created tension between farmer and corporate expectations.
Alliance went back to farmers, who injected $25 million, and another $50 million was raised through perpetual and term bonds which diluted the corporate shareholding.
In the late 1990s that corporate shareholding was purchased for 15% of their original investment.
Mr Poole rejected criticism from the Ministry of Agriculture and Forestry that co-operatives did not reflect the company performance through its share value and had trouble raising capital.
Alliance issued new shares at no cost to shareholders and, between 2000 and 2008, it increased shareholder funds from $214 million to $340 million, he said.
Share redemption has been cited as a risk by Fonterra and SFF, but Mr Poole said Alliance had managed that threat by carefully managing its share register, asking the intentions of dry suppliers - those who had not supplied stock in the previous few years - and paying them out if they continued not to supply.
Prof Woodford said Alliance had returned stronger than ever because shareholders allowed the board to retain earnings.
"They do provide a nice illustration of how a true co-operative model can work."
Fonterra has been watching the SFF capital restructuring with interest, and on-onlookers say it would learn two lessons: putting a cap on the number of voting shares an investor can own while enshrining in the constitution a voting majority for supplier-shareholders.
It would also learn lessons on how to effectively communicate proposals to shareholders.
But Fonterra would also view with caution apple exporter Enza's hybrid ownership model.
Prof Woodford said Enza thought it had secured ownership for growers by stipulating that investors also had to be orchardists.
Corporate investor GPG sidestepped that requirement by buying orchards and soon had sufficient influence to change the model to drive up dividends instead of returns to apple growers.
Eventually, debate over who should fund a massive exchange rate loss caused the Enza model to collapse and it merged with Turners and Growers.
Ravensdown Fertiliser Co-operative has expanded into West Australia and Queensland without going to shareholders for extra capital.
Chairman Bill McLeod said United Farmers in West Australia was valued at $24 million and it was acquired by Ravensdown through a $6 million share script.
Sales targets were then set for five years from which the balance of the purchase price was paid.
Queensland cane growers also invited Ravensdown to set up business, but they paid for fertiliser in advance and Mr McLeod said most of the capital would have been acquired by the time the co-op needed to invest in bricks and mortar.
Co-ops needed to be proactive, telling shareholders in advance why and how much money they needed.
Joint ventures tended to have a life span, but there were other options to fund expansion.
Ravensdown had signalled to shareholders it needed to invest further in the supply of fertiliser.
One option was to ring-fence that investment, with Ravensdown being a shareholder along with farmers and outside investors.
