13 Dec 2008

Fonterra share value drops significantly

3:04 pm on 13 December 2008

The value of shares in Fonterra held by 11,000 farmers fell by 20% because of the global financial crisis.

The annual valuation of the shares farmers must hold to supply milk to the co-operative has been cut by $1.10, to $4.47.

The valuation is reset by an independent valuer each year. Fonterra chairman Henry van der Heyden says it reflects lower share prices for dairy companies around the world over the past 12 months.

The valuation takes the write-down in Fonterra's shares to $2.32 over the last two years.

It also reflects a total write-off of the co-operative's investment in the Chinese company SanLu following a fatal scandal over melamine tainted milk powder.

While the share price's fall will put pressure on some farmers' balance sheets, Radio New Zealand's economics correspondent says it will assist farmers who have to buy more shares to match increased production this coming season following this year's drought.