On 8 April 2021, the Board of Zuivelcoöperatie FrieslandCampina U.A. shared its proposal for future-proof member financing with its member dairy farmers. At the heart of the proposal is the linking of a significant part of the members’ capital to their milk deliveries and a cooperative solution for the tradability of free member bonds.
The new member financing system is necessary to ensure the future tradability of member bonds free, to reduce the imbalances in members’ capital commitment and to strengthen the company’s equity.
Commenting on the changes, the chair of Zuivelcoöperatie FrieslandCampina U.A., Frans Keurentjes, said, ‘Over the past year and a half, we have had an extensive dialogue with our members and the Members’ Council on the new member financing system. We have discussed the dilemmas as well as the starting points for possible solutions and asked them for their preferences. We are now presenting a proposal for new future-proof member financing that does justice to the diversity of our members and marks an investment in the future and continuity of our company, which adds value to our milk in the market.’
Supply certificates worth 8 euros per 100 kilos of milk delivered
The cooperative proposes to issue 8 euros’ worth of supply certificates per 100 kilos of milk delivered to its member dairy farmers. To determine the first issue of supply certificates, the quantity of milk delivered in the period from 1 October 2020 until 30 September 2021 will apply. Members who have less than 8 euros per 100 kilos of milk in fixed member bonds and/or member certificates will be allowed to ‘bed in’ over a period of 10 years by means of a loan provided by the cooperative. Furthermore it is proposed that the cooperative will solve any imbalances in the internal market of member bonds free within its own membership circle.
The proposal will strengthen the company’s foundation, as the capital in the form of supply certificates will contribute to the company’s buffer capital. Once the supply certificates are introduced on 1 January 2022, it is proposed that the ‘Balanced Growth’ scheme will be discontinued.
Adjustment of retained earnings policy
In connection with the introduction of delivery certificates, the cooperative proposes to adjust the company’s retained earnings policy as well. The current retained earnings policy consists of a supplementary cash payment of 35% of the profit, 10% in member bonds and to add 55% to the retained earnings. The provisional proposal is to pay out 40% of the profit over the financial years 2021 and 2022 as a supplementary cash payment and to add 60% to the retained earnings. During the spring members’ dialogue, members will be asked for feedback on this proposal before the Members’ Council makes a decision.
The spring members’ dialogue, during which members can ask questions about the proposal and express their opinions, will start on 12 April 2021. Decision-making on the new member financing system is scheduled for 16 June 2021. If approved by the Members’ Council, the new member financing system will apply as of 1 January 2022.
