Friday's Chorus: 'Fonterra sale to slash GNP'

Briefly in the news¹ in Aotearoa’s political economy around housing, poverty and climate on Friday, October 30:

• Fonterra’s farmers yesterday voted 88.5% in favour of selling the co-operative’s consumer brands, including Anchor, Mainland, Anlene and Ammum, and their 16 associated butter, cheese and infant formula factories in New Zealand, Australia, Saudi Arabia and Sri Lanka, for $4.2 billion.

• They’re expected to get a capital return of $2 per share or around $400,000 for each of Fonterra’s 8,000 farmers, delivering a cash infusion totalling about $3.2 billion early next year, of which about 60% is expected to be either saved or used to repay debt.

• NZ First Leader Winston Peters described the sale as “economic self-sabotage,” adding: “This is an outrageous shortsighted sugar hit that is just giving away New Zealand’s added value to a company from a major EU country. There is now no long-term security for New Zealand’s farmers.”

• Former Reserve Bank Governor, Treasury Secretary, APEC Executive Director & Infrastructure Commission Chair Alan Bollard said in an Op-Ed via BusinessDesk-$ this morning that Peters was right to criticise the sale, adding it was likely to significantly reduce New Zealand’s Gross National Product (GNP) and worsen our trade deficit.

• The ‘delusionary gap’ between business expectations of activity and what actually happens in the following months widened in ANZ’s October survey released yesterday. Businesses’ experienced activity has been between 30-40 percentage points lower than expectated activity since mid-2023, whereas experienced activity matched expected activity between 2019 and mid-2023.

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The Lead: Fonterra’s sale ‘an admission of failure’