A former Fonterra director is warning farmers that the company faces being opened to outside investment unless the current leadership is changed.
Harry Bayliss, an opponent of capital re-structuring moves by the co-operative, addressed Federated Farmers Dairy Council members in Wellington on Wednesday.
He said that while Fonterra's farmer shareholders do not want to see the company opened to public investment, there may need to be a change in leadership and a new chairman appointed so that the company's attitude reflects that of the farmers.
Mr Bayliss said the wider business community would love to demutualise Fonterra and he believes "one or two inside the company" have been convinced of that view.
He does not think farmers have a good understanding of the issues involved with a proposal by the company to allow shares to be traded among themselves.
Instead of focusing on capital restructuring, he said the company should be looking at its own performance and finding other ways to raise money.
Mr Bayliss says Fonterra should be focussing on improving performance, innovating and looking to the future rather than worrying about funding.
He says there needs to be a greater emphasis on retaining earnings within the structure.
Mr Bayliss says if the company had been performing better, capital restructuring would not be such a big issue now.
Chairman Sir Henry van der Heyden has said publicly in the past that there's no intention to open Fonterra to outside investment.