The DIRA Amendment Bill, which proposed a new regime in relation to Fonterra’s milk price setting, capital restructure and share valuation, was passed by 64 votes to 57.
The vote opens the door for Fonterra’s farmer shareholders to buy and sell shares amongst themselves.
In June 2012, shareholders voted to implement the TAF scheme, with 66.45% of those who turned out in favour.
Fonterra chairman, Henry van der Heyden and several members of the New Zealand parliament have welcomed the result.
TAF milestone
“The enactment of these changes to DIRA is another milestone as we move towards Trading Among Farmers,” said Fonterra chairman Sir Henry van der Heyden.
“While the decision to implement TAF was always one for our farmer shareholders, we appreciate the Government’s on-going support for Fonterra and the role it has played in enabling the evolution of our capital structure.”
The DIRA Amendment Bill also proposed a number of new roles for the country’s Commerce Commission, including the monitoring of Fonterra’s methodology for setting farm gate milk prices (FGMP).
The Commerce Commission conducted a ‘dry-run’ review of Fonterra’s FGMP earlier this year, finding that the firm’s practices were consistent with the new legislation.
“The changes also introduce a new regime of Commerce Commission oversight of Fonterra’s setting of the Farmgate Milk Price which will improve understanding of the transparent and robust method Fonterra uses to set its Farmgate Milk Price,” van der Heyden added.
“This is an important time for the Co-operative and we look forward to continuing to work constructively with the Government to strengthen our dynamic dairy industry in a way that benefits all New Zealanders.”
Parliament support
The DIRA Amendment Bill passed its third reading after gaining support from National, Maori Party, ACT and United Future.
According to Primary Industries minister David Carter, the passing of the DIRA Amendment Bill represents a “significant step to continuing a competitive and innovative dairy industry.”
“There has been considerable debate amongst Fonterra’s shareholder base around the merits of TAF. But after the shareholders voting in favour of TAF and the legislation passing today, it is time for Fonterra to move forward growing the opportunities that exist for the company both in New Zealand and overseas,” Carter added.
Fonterra hopes to launch the TAF in November, although it could be delayed depending on market conditions, the firm added.