8 Oct 2012

Sharemilkers advised to watch for fish hooks in TAF plan

1:43 pm on 8 October 2012

Sharemilkers have been advised to keep a close eye on Fonterra's Trading Among Farmers plan because it has the potential to change their milk payments.

Fonterra says it is on track to launch the TAF scheme next month, provided market conditions are right.

It will allow the co-operative's 10,500 farmer-owners to trade shares among themselves and also allow outsiders to invest in the dividend earnings from shares that farmers can deposit in a fund.

Federated Farmers sharemilker chair Kieran Tully says trading decisions made by farm owners may affect sharemilkers' incomes and they need to be aware of that.

"The big fish hooks that we see at Federated Farmers are if a farmer decides to trade shares during the year, and maybe the sharemilker doesn't know about it, it could expose the sharemilker to possible reduction in income.

"Also, from a contractual point of view, (it could) expose the shareholder to topping up payments out of his own pocket if he opts to go for milk price only, as an example, if he sells some shares.

Mr Tully says the contractual arrangements between individual farm owners and their sharemilkers will also influence the impact that the TAF plan could have.