New Zealand dairy giant Fonterra - the world's biggest exporter of milk products - slashed the value of its farmer- shareholders' shares by 20 per cent on Friday, citing "unprecedented turmoil in world equity and financial markets."
Chairman Henry van der Heyden also noted the impact of the difficult global economic outlook on the co-operative, which sells a wide range of dairy products in 140 countries and has annual revenues of about 17 billion New Zealand dollars (9.35 billion US dollars), dpa reported.
He told his 10,700 farmers, who have to own shares in the company relative to the amount of milk they supply, that key factors were the sharp decline in share values around the world and the related global credit crunch.
The new share price for the 2009-2010 season starting June 1 will be 4.47 New Zealand dollars, a drop of 1.10 New Zealand dollars on the current season.
As a co-operative, Fonterra shares are not traded on the stock exchange, but van der Heyden said they were not immune to the same pressures faced by listed companies.
The board sets the price on the basis of recommendations by an independent valuer, who provided a range of 4.14 to 4.80 New Zealand dollars. Van der Heyden said the adopted price is the mid-point of that range.
This is the second consecutive devaluation of farmers' shareholdings in the co-operative, having already been reduced by 1.22 New Zealand dollars this season on the 2007-2008 share price of 6.79 New Zealand dollars.
Van der Heyden said the new price also reflected the planned write-off of Fonterra's 139-million-New-Zealand-dollar investment in the Chinese milk processor Sanlu following the scandal of milk powder contaminated by toxic melamine.
Fonterra warned its farmers last month that because of plummeting commodity prices on world markets they would get about 700 million New Zealand dollars less for their milk in the current season than the board had previously forecast.