Independent Analysis of Fonterra’s Proposed Capital Restructure

Castalia was hired by Open Country Dairy Limited to analyze a proposed capital restructure by Fonterra. The proposal would significantly change the number of shares in the dairy cooperative that prospective farmer-suppliers would have to acquire. The proposal is likely to collapse the price of Fonterra shares. It will shift significant wealth from current farmers to Fonterra itself. This has detrimental effects for competition in the milk processor market, compounding anti-competitive changes in 2020 to the Dairy Industry Restructuring Act 2001. The proposal is likely to lead to higher milk prices, including for domestic milk consumers.

The report is available here.

Queries about the report can be directed to andreas.heuser@castalia-advisors.com

Update 20 April 2022
Castalia has issued a response to comments from Fonterra and in the media about our report. The response is available here.