United States dairy exporters are warning that allowing Fonterra shareholders to trade shares among themselves could jeopardise the inclusion of dairy in the Trans Pacific Partnership (TPP) free trade agreement.
In a letter to Agriculture Minister David Carter, US Dairy Export Council president Thomas Suber said should Fonterra shareholders today agree to trading shares between farmers, it would reinforce Fonterra's market dominance which would be met by opposition to the inclusion of dairy in the TPP agreement.
Mr Suber accused New Zealand of structuring Fonterra in such a way it strengthened the dairy company's monopoly, and that allowing share trading between shareholders would reduce farmer freedom and ability to come and go from the company and therefore the ability of new competing companies to establish.
"The effect of this, together with other elements of the capital restructuring proposal, would reduce, not enhance, a farmer's freedom to choose to whom he sells his product and would increase, not lessen, Fonterra's control of the New Zealand dairy market."
The proposal being voted on today would revoke the requirement for the co-operative to redeem company shares.
Instead, they would be traded among the company's 11,000 shareholders who would be able to own shares equivalent to 200% of their annual milk flow.
Mr Suber's concerns mirror those of New Zealand's second largest dairy company, Open Country Dairy, which claims the share price could fall to a level which locked in shareholders.
His accusations also repeated historic claims, that the Dairy Industry Restructuring Act, which created Fonterra, was designed to retain Fonterra's position as the sector's dominant player.
He said its global share was already "far too great, in our view" and would increase by stifling the growth of competing companies and allow it to disadvantage other producers and exporters.
