The head of Fonterra says the dairy cooperative's future is under threat if its Trading Among Farmers proposal is not approved by farmers in July.
After two years in the making, the dairy cooperative has released details as to how the plan allowing farmers to trade shares among themselves, and a new Shareholders Fund allowing public investment in the cooperative, will work.
Critics say outside investment will erode farmers' 100% ownership and control of the cooperative.
But Fonterra chairman Sir Henry van der Heyden says there are tight controls in place to prevent that and if the plan is not approved, then the cooperative's future is at risk.
"We've got a balance sheet that's not secure and we've got redemption risk. It becomes very difficult to actually drive a business strategy ... I think most farmers they will come out and support this."
Fonterra says the Trading Among Farmers plan will go ahead only if it gets a convincing mandate from farmers. Voting and background papers have been posted to shareholders.
In 2010, Fonterra had overwhelming support for the proposal, with 90% backing the move - well above the 75% vote it needed to proceed.
Fonterra is now asking farmers to confirm their support for TAF by way of a second vote. This time, it is seeking only a simple majority vote of more than 50%.
Results of the second vote will be announced at a special meeting on 25 June.
75% vote needed on other measures
Some of the changes proposed for implementing the Trading Among Farmers plan still require a 75% vote.
They are moves to lower the threshold on the size of the Shareholders Fund from 25% to 20% of total shares and to reduce the number of dry shares on issue (shares not linked to milk production), from 25% to 15%.
Fonterra chairman Sir Henry van der Heyden says the move to tighten limits on the size of the fund is fundamental to preserving 100% farmer control and ownership and the integrity of the farmgate milk price.
Though the size of the fund would be capped at 20% of shares, Sir Henry says Fonterra intends to operate it at a size of 7% to 12% of the total Fonterra shares on issue.
However, he says the higher limit is necessary, because the company needs to make allowances for seasonal changes in milk volume. This season for example, it anticipated 3% milk growth but got 10%.
Sir Henry says adding 10% growth to the 7% to 12% ideal size of the fund would make a 15% cap too restrictive.
Shareholders urged to vote
Federated Farmers urges Fonterra shareholders to vote.
Dairy chair Willy Leferink, who also previously raised concerns about aspects of TAF, says it is the biggest decision for shareholders since Fonterra was formed 11 years ago.
Mr Leferink says it would be incomprehensible if any shareholder did not vote and they should make sure they attend one of the 50 or so farmer meetings in the next few weeks.
Almost 80% of farmer shareholders voted the first time round.