This move is one of the most significant decisions Fonterra farmers will ever make, and the stakes are high. While the potential tax-free capital return of $2.00 per share—equating to an approximate $3.2 billion total payout—is a major incentive, farmers are looking beyond the immediate financial gains. Some are concerned about the loss of ownership of iconic brands they helped build, such as Anchor and Mainland. This is a crucial point in the debate, as it represents a change from a vertically integrated model to a more focused ingredients-based business.

The agribusiness community is watching closely, as the sale is not a done deal. While a vote only requires a 51% majority to proceed, the co-op is seeking a much stronger mandate to back its board’s decision. Farmers are also questioning the long-term impact on profitability, with some wondering if future dividends will be reduced without the “value-add” consumer businesses. The board will need to provide detailed information to convince farmers that the new strategy will deliver long-term value.

A key element that has reassured many farmers is the long-term supply agreement with Lactalis. Under the terms of the deal, Fonterra will continue to supply milk and other products to the divested businesses, which means New Zealand farmers’ milk will still be used in brands like Anchor. This ensures the co-op retains a key role in the supply chain and provides a new, significant customer for its ingredients business, a factor that is critical to the long-term success of the new strategy.