Fonterra Co-operative Group Limited (FCG) Earnings Call Transcript & Summary

Welcome this morning. Just a few housekeeping items before we get into things. If you require the toilet straight out the door along the back wall there. In the unlikely event of emergency, we just ask that people vacate the building in an orderly fashion, and we meet right outside the front doors. If there is an earthquake, please remain seated until the shaking has stopped and then vacate the building in an orderly manner. And on that note, I will open our [indiscernible] and hand it back to our Chairman. [Foreign Language]

[Foreign Language] Good morning, everyone. My name is Peter McBride, Chair of the Board of Fonterra Co-operative Group Limited. I'm pleased to welcome you to the 2023 Annual Meeting of Shareholders of Fonterra, and I now declare the meeting open. The notice of meeting was sent to all shareholders listed on the share register as at the 12th of October 2023 and will be taken as read. Not less than 50 shareholders who, between them, hold not less than 2% of voting rights have cast postal votes either by mail or electronically or are present here in person or online. This means we have the requisite quorum. The agenda for the meeting was set out and you'll notice the meeting booklet. Shortly, our CEO, Miles Hurrell, will address shareholders. Next, I'll present the Chair's review. We'll then open the meeting for questions and answers on the year and review in our presentation. We'll then move to the 7 ordinary resolutions and 2 special resolutions. The Co-operative Council review will be presented by Council Chair, John Stevenson, before putting the resolution relating to the council program and budget. We'll move to the 4 shareholder proposals and then collect the voting papers and open the meeting to general business. We expect to be finished around 1:00 p.m., and I invite those in the room to stay and join us for lunch. I'd like to introduce my fellow directors and senior management from my far left, we have Directors, Clinton Dines, Alison Watters, John Nicholls, Bruce Hassall and Cathy Quinn; and our Director of Governance, Risk and Audit, Anya Wicks. From my far right, we have Directors, Brent Goldsack, Holly Kramer, Andy Macfarlane, Scott St. John, and Leonie Guiney; and our CEO, Miles Hurrell. We also have other members of Miles management team here today, including Simon Till, Mike Cronin Anna Palairet, and Richard Whiteman. I'd like to acknowledge John Stevenson and the members of the Co-operative Counsel, who have joined us today. I'd also like to welcome Mary Jane Daly, the Chair of the Fonterra Shareholders' Fund and representatives from our auditors. We have also invited members of the media who are in attendance today. Before going into the formal business of the meeting, we'll take a look back at the year that's been and the outlook for 2024 and beyond. I'll start by asking Miles to share his perspective. Over to you, Miles. Thanks.

Thank you, Peter. [Foreign Language] and good morning, everybody. On behalf of Fonterra's Management Team, pleased to welcome you to the 2023 Annual Meeting. I thank those that have traveled to be with us today and also greetings to those that are joining us online. Before passing back to Peter, I'll share with you our overview of our financial performance for F '23 and our outlook for F '24 and provide key updates on our Co-op's plan to deliver against our 2030 strategy. I'll then hand back to Peter for an update from the Board. Firstly, the Co-op has delivered a strong set of results for FY '23 and made good progress against its strategic initiatives. During the year, we implemented our new flexible shareholding structure and completed the divestment of our China farms at Chilean Soprole and launched our new Nutrition Science, corporate ventures arm Ki Tua. These milestones were several years in the making, and I'm proud that the team have delivered upon the commitments that we gave to you, our shareholders. Our F '23 financial performance was shaped by market dynamics, which we work hard to make the most of where possible. Our profit after tax was $1.6 billion, up 170% on the prior year, and our return on capital was 12.4%, up from 6.8% last year. This was primarily driven by high protein prices, which we captured through our ingredient channel. Our earnings performance put us in a position to pay a full year dividend of $0.50 per share, including the interim dividend of $0.10. In addition, we returned a tax-free $0.50 per share following -- a capital return following the divestment of our Chilean Soprole business. However, we acknowledge these results -- these strong results were against the backdrop of a Farmgate Milk Price, which fell throughout the season. This was a result of reduced demand for whole milk powder from some of our key importing regions. To optimize our Farmgate Milk Price, we moved milk into high-performing reference products, such as skimmed milk powder and cream where possible and into the final season with a Farmgate milk price of $8.22 per kilogram. We recognized farmers faced pressure on farm due to higher input costs, and the Farmgate milk price was below that breakeven for some. In response, we utilized our balance sheet strength to assist farmers with on-farm cash flow. Fonterra's balance sheet metrics are better than our targeted levels, even after adjusting for the impact of the capital return, thanks to a dedicated focus on lowering debt and financial discipline. This has allowed us to introduce a new advanced rate schedule, which gets cash to farmers sooner. It also support our ability to pay a full year dividend slightly above our targeted dividend policy range of 40% to 60% of earnings. At all times, we focused on what's in our control to maximize overall returns to shareholders and unitholders. We are continuing our disciplined approach through introduction of 2 new efficiency measures and a new resource allocation framework. The new efficiency measures will assist us to stay on track to our short- and long-term targets by ensuring that our costs to manage relative to the value we can generate and the milk volumes that we collect. These two new metrics are a 4% cash operating cost improvement year-on-year, which will assist long-term discipline in our global operating expenses, and a 2% New Zealand cash manufacturing cost improvement year-on-year. This is to support efficient New Zealand operations while ensuring we remain laser-focused on delivering value. We expect the application of these two measures will see us reduce cash costs in our business by around $1 billion by 2030. We're also increasing our focus on the efficient allocation of our farmers milk and capital guided by a new resource allocation framework. Our first priority is safe and efficient operations. We then allocate our farmers milk towards either ingredient, food service or consumer channels according to where we believe we'll see the highest returns. Following this, we allocate the cash generated from those channels to either dividends, capital returns, paying down debt, growth capital, innovation or share buybacks, whichever we believe will generate the best return for our shareholders over time. Looking at F '24, our current forecast Farmgate milk price range for the season remains $6.50 to $8 per kilogram with a midpoint of $7.25. This reflects ongoing reduced demand for whole milk powder, although we have seen some strengthening in prices recently as demand dynamics improve. New Zealand milk collections are forecast to be slightly lower than last season, while aggregate milk growth in key export markets is also expected to be below average. On the demand side, it's not yet clear whether the strong demand in recent GDT events will be sustained. So we're being cautious with our outlook. Looking at our forecast earnings for F '24, the favorable price relativities that we experienced across last year and which drove our ingredients channel performance have reduced from their peaks. But we are forecasting improvement in our consumer and food service channels as our markets improve and we improved better margins. As such, our F '24 forecast earnings range for continuing operations is $0.45 to $0.60 per share. Last week, we announced Neil Beaumont is leaving the Co-op after a relatively short time with us as CFO. While the terms of Neil's exit are confidential. I can confirm that his departure was mutually agreed by both Fonterra and Neil and was not in any way linked to the Co-op's financial performance. And while he was with us Neil created some real momentum in terms of how we set and achieve our goals for 2030, including the Resource Allocation Framework and the two additional efficiency metrics, and cost reduction targets we have added to our performance framework. I am determined that this momentum will continue. And we've commenced a recruitment process for our new CFO. And in the meantime, I am pleased to have Simon Till acting in this role. Simon has been with the Co-op for over a decade and will be known to many of you. I'm also confident in our management team, which includes Simon, will continue to make strong progress and deliver for our shareholders. Turning now to our strategy, over the medium to long term, the outlook for New Zealand dairy remains positive. Demand for sustainable nutrition is continuing to grow and by implementing our strategic plans we are well positioned to meet this demand. As we know, being leader in sustainability is a fundamental part of our strategy. We already have a competitive advantage, thanks to our pasture-based farming model that produces some of the lowest carbon milk in the world. But we also know we need to keep moving to retain that competitive edge. At last year's annual meeting, we signaled that we are considering introducing an on-farm emissions target. Since then, we have held meetings, webinars, engagements with farmers on why the target is needed and what one could potentially look like. And I thank those who participated in those sessions. To recap, having a target will assist us retain and grow customer partnerships and access finance and export markets. It will also bring us into in line with our main global competitors, most of which already have set targets. This is why we've decided to introduce a target of a 30% reduction in our on-farm emissions intensity by 2030, from a 2018 baseline. Fonterra farmers have built a world-leading business on the back of innovation and hard work. And we know farmers will continue this tradition and continue to lead the way in producing high quality sustainable dairy, which gives us the confidence to set this target. It's important to note that our target we measured at the Co-op level, not by farm -- not at farm level, but collectively achieving this, it will need action by all. Also, an intensity target means we're seeking to reduce the number of emissions per kilogram of milk solids, which is all about finding efficiencies on farm. We see a credible pathway to 30% reduction, which looks something like a 7% reduction through best farming practices, including feed quality and herd performance; a 7% reduction through the application of new technologies such as Kowbucha; an 8% reduction through carbon removal from existing and new vegetation; and an 8% reduction from historical land-use change. While everyone will have opportunities for efficiency gains, the action plan will look different for each farm. The farm insights reports provided to you by your Co-op identified the opportunities on your farm and your farm source team can advise on the tools, service or industry resources available to realize these gains. As the target will be measured from a 2018 baseline and any change made since 2018 contributes to the 2030 goal. And progress has already been made in the areas of sequestration and land-use change. More importantly, of the 7% we're looking to achieve through best on-farm practice, we've already achieved a 2% reduction Co-op wide. We know the rate of change that farmers are facing is already challenging. Good progress can be made towards the target with the tools we already have available and your Co-op is here to assist along the way. During visits this year to Europe, China and the U.S., it's been very clear to me that sustainability is top of the agenda with customers and our competitors are moving at pace. It's great to see Nestle and Mars directly supporting farmers with us. And you'll hear more about this over the next year. The target we have introduced is credible and internationally recognized. It will help to future proof the Co-op and your farming business, supporting our ambition to be a long-term sustainable Co-op for generators to come. Thank you for your time today. I'll now hand back to Peter.

Thanks for those comments, Miles. Before we move into the main business of the meeting, I'd like to add the Board's perspective to a couple of the topics that Miles has covered today. Performance is always first and foremost for us, so I'll start there. Miles and the team have delivered a third consecutive year of strong performance overall, despite facing into difficult market conditions in a number of channels and regions. Top line, the team can be proud of delivering a reported profit after tax of $1.58 billion, equivalent to $0.95 per share and up 170% on last year. For share-aligned farmers, the strong earnings performance is helpful in the context of lower Farmgate milk prices. As Miles said, our final milk price for the '22/'23 season was $8.22 per kilogram of milk solids, down from the high forecast midpoint of $9.50 in June 2022 when we witnessed the impact of lower-than-anticipated demand for imported products, particularly from China. The impact would have been far greater, if not for the team's efforts to utilize the scale of the Co-op and shift milk into the products and places that were delivering the most value at the time. While on the one hand, our milk price was negatively impacted by market forces. On the other, our earnings did benefit from favorable market conditions, including strong margins in our ingredients channel, in particular, the cheese and protein portfolios. In other words, the market presented us with an opportunity, and the diversity of the Co-op's product mix meant our teams could go after it, where others may have struggled. There's one other key performance indicator that I'd like to call out. Improving the strength of our balance sheet and reducing debt has been a priority for us over recent years. As you can see from the slide, we have made significant progress over a number of years through a combination of improved performance and increased financial discipline. Our net debt is down $2.1 billion to $3.2 billion, reflecting our lift in the earnings, reduced working capital plus divestment proceeds. By reducing our overall debt position, we have been able to increase dividends, pay the capital return and make changes to our Advanced Rate Schedule. An acknowledgment of the declining milk price environment and the impact that has on farmers, the Board made the final decision to pay a final dividend of $0.40 per share, which is slightly above our dividend policy. Combined with the interim dividend of $0.10 per share, above the full year dividend of $0.50 per share in unit. Sitting behind these excellent numbers with some real challenges, particularly here in New Zealand. Extreme weather events again took a toll on many of our communities. In February, Cyclone Gabrielle hit the North Island with Northland Coromandel, the Hawke’s Bay and Gisborne amongst the hardest hit. In the Hawke's Bay and Gisborne, some rural communities were cut off, suffered losses to their property and experienced animal welfare issues. As a Co-op, we looked after each other, when it comes to the natural disasters like this. The Co-op helps farmers to manage these types of risk through what is known as a Force Majeure' event. In accordance with the Terms and Conditions of Supply where we had to instruct the farmer to dispose of the milk or dry off. Appropriate compensation for these farmers was made. The payments are one less thing to worry about in a time of crisis and one of the many benefits from being part of a farmer co-operative. Our Flexible Shareholding capital structure has been in place since March this year. It's working broadly as expected. There is a misconception that Fonterra is active in the market to prop up the share price. Following the transition to the Flexible Shareholding structure, we implemented market maker arrangements, to support liquidity in the Fonterra Shareholders' Market. We also have the ability to buy back shares as part of our ongoing capital management program, where we see it as value accretive to the Co-operative. Our share price has come down. This was anticipated and well signaled before shareholders voted to support the changes to the capital structure. There's also been a share price impact as a result of the recent capital return. Over time, we expect that the price will reflect the Co-op's financial performance and the value farmers see in that. Ultimately, farmers will determine the value of the shares. Flexible Shareholding is the right capital structure for our Co-operative. By making it easier for farmers to join or stay with the Co-op, it will also help to maintain a sustainable milk supply here in New Zealand, where milk volumes are declining. The team of people that farmers engage with most often is Farm Source. I want to acknowledge the feedback that Co-op received from farmers in response to the structural changes that were made to some of the farmer-facing teams. Representation of your interest is the primary role of the Co-operative Council. But I do acknowledge that farmers value the relationships they have with our field teams and the direct access that they have to directors. I want to reassure you that neither the governance changes we will discuss later today in the meeting, nor the changes that have been made to Farm Source will impact on your ability to share your views with us directly. I know I speak for all of the directors when I say that, we will continue to make ourselves available to you to discuss governance of our Co-op, farmer-to-farmer. The changes that were made to Farm Source were motivated by the changing nature of the role. A lot of farmers are looking to the Co-op for guidance, technical information and help connecting them with experts that can help them with the changes that are required on farm. We will never tell you how to run your farming business. However, we will support you as we all embrace the emissions challenge ahead of us. The Farm Source team is critical to helping farmers access information and experts, connect the dots for ourselves and to create forums in which we can share insights and ideas farmer-to-farmer. As Miles announced earlier, the Co-op is committing to a 30% intensity reduction in total on-farm emissions by 2030. I want to reiterate that his point that this is a Co-op-wide target and not an individual farm target. There is no one solution to reducing on-farm emissions. We need to approach this farm-by-farm. But we all have work to do. It is a confronting number. The same goes, there is only one way to eat an elephant and that's one bit at a time. As Miles explained, we can see a credible pathway to achieving the target by making incremental gains across the four areas of focus. Achieving the target will require a combination of sharing best farming practices and technology to reduce emissions. It's both our biggest opportunity, and it's also our biggest challenge. There is significant variation within and across farming systems when it comes to emissions per kilogram of milk solids. We are confident that we can make solid progress towards our target by working together and sharing information farmer-to-farmer. The reduction target is also based on our 2018 baseline, so the good work farmers have done already does count in this area. We have deep empathy for the challenges of our farmers and the issues they were already dealing with. The Co-op's approach will be to work alongside farmers, not against them, as we collectively make progress towards our target, including investing in methane-reduction technologies. Our methodology will continue to evolve alongside the science that supports the changes. We will continue to invest with our dairy partners globally and the evolution of the scientific models that assess agricultural emissions. I want to be very clear with you that respectfully, the need for on-farm target does not change as a result of the general election. The strongest motivating forces are offshore, and from my perspective, are both geopolitical and commercial in nature. Being a leader in sustainability is a fundamental part of our strategy. Miles has already talked about the competitive landscape and the partnership requirements of our key customers. Sustainability and emissions are also the new trade barriers. We could essentially be locked out of some of our most valuable markets if we cannot demonstrate emissions reductions. You already see that in the EU, they are introducing a Carbon Border Adjustment Mechanism that applies carbon tax to certain products imported into the EU. The EU is also looking to impose carbon charges on transport of goods to market, leaving on all large ships entering their ports. Our other main commercial driver is access to funding and capital, both for the Co-op and for your individual farming businesses. The main banks and financial institutions have already set emissions reduction targets. Our on-farm emissions and the Co-op's operating emissions are a large part of the Scope 3 emissions, which they are seeking to reduce. We know that some of our local competitors may use this as a procurement tool in the short term. But the commercial reality of doing business at scale internationally will capture all of us in time. They will be late to the party and presented with an even bigger elephant to eat. Despite the upward trend across recent Global Dairy Trade Auction prices, we are still anticipating a challenging operating environment for the year ahead. The Co-op is entirely focused on performance and reducing its cost to offset the impact of inflation over the coming years. Farming is a long-term game and as an exporter, we need to accept that we are impacted by demand and supply dynamics, commodity prices and geopolitical events. The Co-op does its best to try and smooth the edges and optimize value, but there will always be volatility. Ultimately, strong performance is the best way we can support our farmers through this difficult period. That remains our focus for the year ahead. Despite the very real challenges the industry faces this season, the longer-term outlook for New Zealand dairy remains very positive. The world wants our sustainable New Zealand milk. Fonterra is in a strong position to make this demand. Our current balance sheet gives us a lot of options to create more value, which is exciting for our future. Thanks, everyone. I'll now ask Miles to join me, and we'll take any questions that you have in relation to our opening remarks.

If you have any questions or comments on the resolutions being dealt with later in the meeting or other matters of general business, I'd I say you wait until the appropriate time during the meeting. In the interest of being us, we have limited time, so please keep your comments as brief as possible and do not repeat questions or comments that have been made already. If you're here in the room, please wait for a microphone to be handed to you by one of the team. Before you speak and introduce yourself, please, when handed the microphone. If you've joined online, you can submit a question by asking - by clicking the ask the question button at the top of the menu bar. Co-operative Counselor, Greg McCracken will act as timekeeper. And in the interest of [indiscernible] I'd request that you do not ask more than one question on each subject. As the time for each question approaches 2 minutes, you'll hear a bell, and please return the microphone to the team at that point. Thank you. Any questions? [indiscernible]

[indiscernible]. Yes, somebody has got to be the first one, I suppose. So it's me. Strategy is my favorite subject, and I was glad to hear when you talked about it. But to me, it's still not the essential because the leader in sustainability and leader in R&D and I think, leader in what was the third one?

New Zealand milk.

Yes, New Zealand milk. They are kind of a license to operate, and they're not really strategic aims, as you explained by the way, Peter. So what I'm very much interested in is what exactly is our competitive advantage in the markets that we sell in, because most of our competitors can claim the same things that we claim. So whatever we claim a strategic aim today, to me, is a condition to create competitive advantage, but it is definitely not sufficient. So what exactly is our competitive advantage in the markets that we sell?

Yes. It's a combination. It's bringing those three things together. So one of the key decisions we made and we reset our strategy back in '18, '19, '20 around that time was this focus on New Zealand Milk, because the farming system that you operate is unique at scale when you combine it with our expertise and innovation and taking that forward into the next phase. So it's a combination of those 3, which I think is unique. Yes, there are other pasture-based farming models that operate in the Northern Hemisphere, but not at scale when you combine it with innovation and you focus on the sustainability as well. So it's bringing those 3 together. And then our routes to market, yes, being focused on our key markets and working closely with key customers in those markets is paramount. So it's a combination of those three, which I believe is a strong competitive advantage for us.

Okay. Any other questions?

[indiscernible] In the accounts, you forecast potential investments like large investments that the company could make going forward. Yes, this is presumably part of the strategy. It looked quite exciting for me because you are wanting to make returns and you had disciplines around that. So I guess the departure of the CFO is sort of makes me as a shareholder wonder, are we still online? What are you thinking about in terms of the growth and things that will produce earnings and returns above the milk price for the company?

So when we put out our [ LTA ] in 2020, if I recall, we put out some metrics right out to 2030. So some key milestones, '24, '27 and '30 if I recall correctly. And those metrics haven't changed. So we've committed to those. They're out there in the market and any deviation of those were obliged to tell the market. So I think the first question is -- well, the first comment that you wanted to make was, have they moved in the answer of that simply is no. We have seen some momentum build more recently in terms of what we're going after some more ambition around our Scope 1 and 2, and so you've seen that spend come up a little bit. But at the same time, we've just come off the back of a very strong earnings year. So our balance sheet is in a very strong position to be able to support both the growth and the decarbonization capital that we have in our plans.

Thanks, Miles. Are there any questions online at the moment?

A number of questions online, Mr. Chairman. The first one from Peter Bickers. Can you clarify how the start land-use changes will contribute 8% towards emissions reduction targets?

It sounds like a question for [ Andrew ], sitting right in the front row with great enthusiasm. Thanks, Andrew.

Fonterra's inventory, we have to take responsibility for deforestation that sets within our value chain. The deforestation time period that we are responsible for that until it's deemed to be neutral is a 20-year time horizon. So we've got a significant amount of land-use change that happened in our dairy supply chain in that period up until 2010. So it falls within our 2-year time horizon. As those emissions that we currently account for before the end of the time period, they have been reduced.

Are there any other questions in the room? There's more online.

Two more online Mr. Chairman. The second one, similar theme. This is from [indiscernible]. Are the emissions targets driven by science or market politics?

Yes. The targets are driven by what our customers and markets are seeking, not politics, certainly, science plays a part. But the key driver here is what our customers and consumers are looking for and Peter also referred to market exits as well. So they are the key drivers for us.

And sources of capital is another major issue. And you'll see in the next little while, you'll see more announcements around banks with the targets, your own emissions reduction targets. And our goal is to help support you through this process. It's really important that we all understand that really important. So that's a big part of it for us. But it's definitely being driven by customers for sure. Any more questions? One more?

One additional online question, Mr. Chairman, from [indiscernible]. When our staff leave, we have an exit interview to and understand why farmers have told me they would like to know why our CFO has leaved so quickly? Why is this information confidential?

Yes. The departure of CFO was a mutually agreed between he and I and the terms of that exit remain confidential. What I will give confidence and I referred to it in my speech, is that the momentum that Neil bought to the cooperative will absolutely continue.

Thanks, Miles. Any more questions in the room?

Okay. We'll now move on to the business of the meeting, voting and the Director Remuneration Committee, Cooperative Counsel and Fonterra Farmer Custodian Trust elections and on the Annual Meeting resolutions is one of the fundamental rights that we all have as shareholders. The resolutions to be considered have been set out in the notice of meeting. Each resolution will be by way of a poll, postal and electronic voting was approved by the Board for these resolutions. And electionz.com Limited were appointed to receive and count these votes, which will all be included in the poll. Each ordinary resolution must be agreed to by a majority of 50% of the votes of shareholders entitled to vote and actually voting on that resolution for it to be passed. Each special resolution must be agreed to by a majority of 75% of the votes of shareholders entitled to vote and actually voting on that resolution for it to be passed. Each shareholder with a voting entitlement has received a voting paper and the notice -- with then notice of meeting pack. The resolutions are all set out in the notice of meeting and will be taken as read. Each resolution will be moved and secured by a director, a member of the Co-operative Counsel or a member of the Directors' Remuneration Committee, who may speak briefly to that resolution. Mr. Dampney will speak to his four proposals later in the meeting. I'll invite comments and questions on the resolutions. I'm aware of the time, so I may have to limit comments and questions to 6 to 8 per resolution. Again, as the time for each question approaches 2 minutes, you'll hear a bell, I would ask that you then return your microphone to the team. When you're asked to vote, if you are here in the room, please place a tick in either the for or against box alongside the relevant voting resolution on your voting paper. If you've joined online, you may vote by clicking on the click here to vote button on the top menu bar. Please complete your voting on all resolutions before you click and submit. The scrutineers from election newzealand.com limited will track noncompliant votes as invalid, so please take care to follow the instructions. For those of you here today in the room, we'll collect the voting papers following the voting on all of the resolutions. The results will be posted on the Farm Source section of our website, the NZX and My Co-op app as soon as possible today. Let's move to the resolutions. Resolution one relates to elected directors remuneration. Our constitution requires that the Directors' Remuneration Committee bring recommendations to the shareholders on the remuneration of elected directors and cooperative counselors. I'll ask Conall Buchanan, Chair of the Directors' Remuneration Committee to propose the motion on elected directors remuneration and speak to the committee's recommendations. Once it has been seconded, I'll open the motion for questions. Thanks, Conall.

Thank you, Peter. [Foreign Language] And good morning to everyone here and online. In July this year, the committee reviewed remuneration practices in New Zealand and Australia. We considered whether current remuneration levels are appropriate to ensure highly skilled directors were attracted and retained on the board, noting a substantial director workload. We agreed that small incremental annual increases in fees continued to be our preferred approach. Rather than having periods of no increase followed by large uplifts. We discussed the appropriate level of an increase in the current inflationary environment, being mindful of the financial difficulties that many shareholders are facing. . Following extensive discussion on the best balance of these factors, we recommend that shareholders approve an increase of 14,000 per annum being 2.97% to the remuneration of the chair, this would take the shares remuneration to $484,000 per annum. An increase of $5,500 per annum being 2.88% to the remuneration of each elected director, and that would take elective directors' remuneration to [ $196,500 ] per annum, an increase of $1,500 per annum being 3% and to the additional amount paid to the Chair of the Audit, Finance and Risk Committee that would take that additional amount to [$ 51,500 ] and an increase of $1,000 per annum being 2.78% to the additional amount paid to the chair of each other permanent Board committee. This would take that additional amount to $37,000. We recommended that no changes are made to the discretionary pool of $150,000 per annum and note that this pool was only partially used in the last year. Accordingly, I move resolution 1.

Thanks, Conall. I understand that Richard [ Stalker ] will second the motion. [indiscernible] Thanks, Richard. I'll now open the resolution for discussion. Do we have any questions in the room? I see question over here. No.

[indiscernible], but just using Conall's word into that. Obviously, you have Board of directors that you want to keep and skilled. But all the dairy farmers in the room have members that are skilled and they want to keep as well. And obviously, with the dropping payout as well. Obviously, you are saying that you're trying to take that into account. But it just doesn't seem appropriate at this time, in my opinion.

[indiscernible]. Look, I'm happy to respond to that. And I absolutely hear what you're saying. Certainly was, as I mentioned, quite the discussion at Directors' Remuneration Committee, and I'll come back to the comment I made. And in the past, there have been occasions of no increase in payment for a number of years, which then requires a substantial increase in the future. So it was a conversation amongst shareholders elected for this purpose, and this is where we ended up. But still acknowledging what you say.

Yes. Are there any questions online? Okay, move on.

This ordinary resolution requires 50% support. I'll now put Resolution 1, which has been moved and seconded. For those of you here in the room, please complete your voting paper by placing a tick in the appropriate box for resolution 1. If you've joined online, please vote by clicking on the click here to vote button on the top menu bar. If you have any difficulties, please raise your hand and someone will assist you. We'll click on the help button and the online meeting platform. Now we move to Resolution 2. I'll ask Conall to move resolution 2 and address the meeting on the recommendation for Co-operative Counselors remuneration. Thanks, Conall.

Thanks, Peter. The committee also considered counselor remuneration in July this year. As with director remuneration, we agreed that small incremental annual increases in fees continued to be the preferred approach. We noted that the level of honor area needs to be sufficient to attract shareholders of a high caliber and to recognize that counselors are required to pay rising labor costs for time or farm while performing counsel duties. We discussed the appropriate level of an increase in the current inflation -- inflationary environment, being mindful of the financial difficulties that many shareholders are facing. We recommend that shareholders approve an increase of $4,000 per annum being 3.33% to the remuneration of the Chair. This would take the shares remuneration to $124,000 per annum, an increase of $1,250 per annum being 3.25% to the remuneration of each counselor. This would take each council's remuneration to $39,750 per annum. And we recommended that there'd be no change to the discretionary pool of $100,000 per annum. And also note that this was only partially used in the past year. Accordingly, I move resolution 2.

Thanks, Conall. I'll now call on Richard to second the motion.

Yes. Thanks, Peter. I second the motion. I'm fully supported.

Thanks. I now open the resolution for discussion. Do we have any questions in the room? No. Questions online ? No. This is an ordinary resolution that requires 50% support. I'll now put Resolution 2, which has been moved and seconded. Please place a tick in the appropriate box on your voting papers or complete your voting online. Again, if you have any difficulties, please raise your hand for assistance or click on the help button in online. We now move to Resolution 3. Thanks, Conall. I'd like to ask Brent Goldsack to move resolution 3 and to briefly address the meeting on the recommendations for the remuneration of the Directors' Remuneration Committee.

Thanks, Peter. Good morning, all. So the Board's met and it's considered and recommend to shareholders both the form and the amount of the remuneration to be paid to the members of the Remuneration Committee. We note that the Directors Remuneration Committee members on [indiscernible] has not increased or the last increase was in 2001. However, we are not recommending that there'd be any changes to that this year. And the Chair remuneration will remain at $2,500 per annum and for the members that will be $1,500 per annum. Accordingly, Peter, I'd like to move the resolution.

So is the last, I mean in 2021 not 2001.

Oh sorry, sorry.

Thanks, Brent. I'll now call on John Nicholls to second the motion. [indiscernible] Thanks, John. I'll now open the resolution for discussion. Do we have any questions in the room? Any questions online? Okay. This is an ordinary resolution requires 50% support. I'll now put Resolution 3 and ask you to complete your voting by placing a tick in the appropriate box on your voting papers or by voting online. Please move to Resolution 4. I'll ask Cathy Quinn to move Resolution 4, the resolution regarding the appointment of the auditor. Before this I'll invite Bruce Hassall to speak to the motion. Bruce is an independent appointed director and does not have a shareholding entitling him to move or vote on the resolution. However, in his role as the Chair of the Audit and Finance and Risk Committee, it is appropriate that Bruce comments on the auditor.

Thanks, Peter. Good morning, everybody. The company deck requires Fonterra to appoint an auditor and provides that fees and expenses of an auditor appointed at an annual meeting can be fixed in a manner determined at that meeting. KPMG has audited Fonterra's financial statements for the year ended 31 July 2023. The Board recommends that KPMG be appointed as auditor for the coming year. The Board also recommends that shareholders authorize the Board to fix the auditor's remuneration. As I am not a shareholder, Cathy will move the resolution.

Thanks, Bruce. I'll now ask Cathy to move Resolution 4.

Thank you, Peter. And Bruce, I'll now move resolution 4.

Thanks, Cathy. I'll now call on Alison Watters to second the motion. Thanks, Alison. I'll now open resolution for full discussion. Do we have any questions in the room? Any online? I know the auditors were decidedly nervous that we're going to have questions that's good to see. This is an ordinary resolution requires 50% support. I'll now put Resolution 4 and ask you to complete your voting. Now we will move to Resolution 5. Resolution 5 seeks ratification of Bruce Hassall's reappointment as a director as a Board-appointed director. I'd like to call Leonie Guiney to move Resolution 5.

[indiscernible] speak to Bruce Hassall's reappointment as an independent appointed director. Bruce was first appointed to the Fonterra Board in 2017. Bruce is regarded as a senior director with extensive governance advisory and leadership experience across Co-ops, listed and private companies and government organizations. He is Chair of Fletcher Building Limited, The Farmers Trading Company Limited and Prolife Foods Limited and a Director of Vector Limited. Bruce was previously a Director also of the Bank of New Zealand and a member of the University of Auckland Business School Advisory Board. Through his 30-plus year career, at PwC, he gained extensive experience in financial reporting, information system processes, risk management, business acquisitions, capital raising and IPOs, across both listed and private companies, -- initial public offerings, sorry. Over the last 6 years, Bruce has made a valuable contribution to our Board and to Fonterra. He undertakes a substantial critical workload on behalf of the Board, which includes [indiscernible] with the external auditors and management as Chair of the Audit Finance and Risk Committee. He's also a member of the Disclosure Committee and an observer on the milk price panel. Accordingly, I move resolution 5.

Thanks Leonie, I'll now call on John Nicholls to second the motion.

The motion is fully supported.

Thanks, John. I now invite Bruce to make a brief comment.

Thanks, Peter. Good morning, everybody. I'm delighted to have the opportunity to offer myself for reelection as an appointed director of Fonterra. Your Co-operative continues to play a critical role in New Zealand's ongoing prosperity. I am very proud to be standing before you today seeking your support. When I first joined the Board 6 years ago, we were facing a number of challenges. But we've come a long way since then, and I'm pleased to have played my part in dealing with past challenges and setting up your cooperative for the period ahead. There will undoubtedly be some new challenges ahead and some great opportunities, that's the nature of the world we all live in today. However, I want to give you my assurance that whatever challenges come Fonterra's way, I'll always endeavor to bring my high energy to Fonterra and always act in the best long-term interest of your Co-operative.

Thanks, Bruce. I'll now open the resolution for discussion. Do we have any questions in the room? Any questions online? No. Okay. This is an ordinary resolution requires 50% support. I now put Resolution 5 and ask you to complete your voting. Resolution 6, ratification of Holly Kramer's reappointment as a Board-appointed director. I'd like to call on Andy Macfarlane to move resolution 6.

Thanks Peter. [indiscernible] to speak to Holly's reappointment to the Board. Holly was first appointed to the Board in 2020, just at the start of COVID. She has more than 30 years of governance experience management and product marketing experience. Holly was Chief Executive of the major Australian retailer, Best & Less and senior executive roles in Telstra, Ford Motor Company and Pacific Brands I think she knows a little bit about cars as well as [indiscernible]. Holly is a Director on the Board of Woolworths, which is the other end of the food supply chain to us, where she's Chair of the Sustainability Committee and ANZ Banking Group and Associate and also some start-up companies, which are interesting. Her previous roles include on the Boards of Abacus Property Group, Australia Post Endeavor Group, Nine Entertainment Corporation, AMP Limited, Lendi, which is in the property space, TelstraClear and the ethic center. So you can see she has massive experience. Holly fulfills a number of key roles on the Board, including Chair of the People, Culture and Safety Committee, which is really important committee, obviously. And also serves on the sustainability and Innovation Committee. She brings extensive remuneration governance capabilities and her Australian experience, which is one of the key reasons we looked at originally to come on to the Board. So accordingly, I'd like to move Resolution 6.

Thanks, Andy. I now like to call on Brent Goldsack o second the motion.

I'll be delighted. Holly's outstanding. I second the motion, fully supported.

Thanks Brent. I'll now invite Holly to make comments. Thanks, Holly.

Good morning. Thanks, Peter, and thanks, gentlemen. Look, I'm actually quite thrilled to be here in Methven first because I get to be here in person, unlike my previous election where I was trapped by COVID back in Australia. And also just because this is a beautiful place, and it's a big benefit of being on the Fonterra Board that I get to come to New Zealand regularly and say you're a beautiful company, but there are lots of reasons to want to be a part of Fonterra. Therefore, I am seeking your support today for my reelection. It is a really critical time in the business in our increasingly unpredictable world. And I think I can bring practical skills and experience that complements the expertise of your fellow [ former ] directors. First, I do have a fair bit of experience in governing people, culture and [indiscernible] practices as well as safety. But in particular, Chair of the Remuneration Committee. I helped lead our work on the new reward framework, which has sought to create long-term incentives for management that better align their interest to that of commercial experience felt by shareholders. And second, as you heard, I sit on the boards of companies like Woolworths and ANZ Bank, which are very important players in the dairy value chain. So this helps provide me with unique insights into the trends that are driving these major changes that you've heard so much about today. Trends like digitization and decarbonization and also changing customer preferences. And also, I bring my experience as an operating CEO and a large retail business. And I think this gives me the ability to bring a balanced perspective to the unique relationship between governance and management. It has really been a very great privilege to serve on your Co-op Board for the last 3.5 years, and I look forward to the opportunity for another term. Thank you very much.

Thanks, Holly. I'll now open the resolution for discussion. Do we have any questions in the room? No. Questions online? No. Thanks. This is an ordinary resolution requires 50% support. I'll now put Resolution 6 and ask you to complete your voting. Resolution 7 seeks approval of Amendments to the constitution relating to the composition of the Milk Price Panel. I'd like to call on Leonie Guiney to move Resolution 7.

Thank you, Peter. The 2022 Act that amended the Dairy Industry Restructuring Act requires that the independent chair of the milk price panel has no meaningful association with Fonterra or a shareholder. And it also requires that be approved by the responsible minister under [indiscernible] and that it also required that we increased the number of members on the panel nominated by the minister from 1 to 2. Fonterra's constitution in the Fonterra shareholders' market rules set out requirements applying to the panel, including its size, its member composition and the independence of its members. Currently, the panel has 6 members, being an independent chair, 2 independent ministerial nominees, 2 counsel nominees, 1 of whom is an independent and 1 elected Fonterra Director. So the Board recommends that the constitution is actually amended to increase the size of the panel to Seven to accommodate the additional minister nominee and independent cheer while allowing the number of panel positions held by the Fonterra Directors and cooperative counsel nominees to be to 2 each. As the proposed amendments will alter Part A of the constitution, the approval of the amendment by a majority of 50% or more of members of the council was required, and we received that on the third of October. Thank you. If Resolution 7, then is passed by shareholders, the constitution will be amended as set out in the notice of meeting upon the EPCM Fonterra shareholders' market rules being amended to be consistent with this change. So I now move Resolution 7.

Thanks, Leonie. I'll now call on Andy Macfarlane to second the motion.

Thanks, Peter. I fully support the motion and accordingly would like to second it. Thank you.

Thanks, Andy. I'll now open Resolution 7 for discussion. Do we have any questions in the room? No. Questions online? No. Okay. The special resolution requires 75% support. I now put Resolution 7 and ask you to complete your voting. Resolution 8 seeks approval of amendments to the constitution relating to the Board's size and composition. I'd like to move Resolution 8. In 2016, I joined Board and counsel committee later review into the Co-op's governance and representation practices, resulting in a number of changes being made. The 5-year review of the changes that followed in 2021 recommended that Board size and composition be reviewed in 2024, given the Board's workload and priorities at the time, which included the capital structure review. With this work now complete or a part of business as usual, the review of the Board's size and composition was brought forward to this year. We've been consulting with shareholders and the council on board sizing composition since early June. We want to strike a balance between the need for a Board with a diversity of skills and experience and the capacity to cope with the Board's variable workload and with a smaller board would align better with the Co-op's targeted focus and altered footprint that comes with a strategic focus on adding value to New Zealand milk. The proposal being put to you is that a Board size of 9 with 6 elected directors and 3 appointed directors achieves the right balance. As the proposed amendment will alter Part A of the constitution, the approval of the amendment by a majority of 50% or more of members of the council was required and was received on the third of October. If Resolution 8 is passed, the changes will apply from the 2024 Annual Meeting with the removal of one elected director position and one appointed director position at that time. If Resolution 8 does not passed, the recommended changes will not take effect. I now move Resolution 8. I'll call on Alison Watters to second the motion.

Thank you, Peter. I second the motion and fully support it.

Thanks, Alison. I'll now open Resolution 8 up for discussion. Do we have any questions in the room? No. Any questions online? No. This is a special resolution requires 75% support. I now put Resolution 8 and ask you to complete your voting. John Stevenson will now present the Council of Chair's report and the proposed Resolution 9, which relates to the approval of the Cooperative Council program in budget.

Thanks, Peter, and good morning, everyone. [Foreign Language]. As Peter mentioned, my name is John Stevenson, Co-operative Counselor from the Wairarapa and Chair of the Fonterra Cooperative Council. I Started today by acknowledging the local Mana Whenua, I would also like to acknowledge the members of our Co-operative present and online. Peter and his Board and Miles and his management team. It is a privilege to be able to report to the Fonterra AGM on behalf of the Co-operative Council. Today, I will speak to 4 matters as required by the constitution. First, Council's activities during the '23 financial year. Then Council's view on the alignment of Fonterra's strategy and performance to members' expectations. I will present the Milk Commissioner's report for the 2022-'23 season. And finally, I'll present the Council's work program and budget for the '24 financial year for your approval. Regarding Council's activities, our role as council was to represent you. Our vision is that through effective representation, you feel heard, valued and connected to your co-op, but more importantly, you have confidence in its enduring success. One of our key functions is to report Co-op member feedback and sentiment to the board on your behalf. I acknowledge that the last 12 months has brought some challenges to us as farmers. Many of these challenges, such as increasing interest rates, rising input costs and the weather have been well beyond our control. We have consistently reported to the board the impact of these challenges on farmers. We have also reported feedback on matters where Co-op members had concerns such as the declining forecast milk price and Fonterra's milk price forecasting, subsequent issues with farmers' cash flow and operating capital and concerns relating to the level of farmer facing, Farm Source Team support. Feedback to the Board has also included areas where farmers were seeking further information such as around the setting of a Scope 3 target and the value that will arise for farmers from Fonterra being a leader in sustainability. From time to time, we do recommend topics which we believe require more discussion with members or where they should be more reporting. You can find a list of these in our 2023 annual report. Council conducts an annual survey to inform the letter of members' expectations that it delivers to the Board each year. This letter is an opportunity for all of us to sit out at a high level what success looks like from our perspectives as owners, investors, suppliers and members of the Fonterra community. Following the survey, we consulted with all Co-op members on a draft of the letter before finalizing it and sending it to the Board. This is the third year that we have conducted the survey. Our letter categorizes the expectations under 5 headings, culture, performance, investments, pride in our Co-op and an enduring co-operative. Council has also formed its view on the extent to which it considers the members' expectations are being met, which I will speak to shortly. Council's of the view that we are seeing evidence of the Board and management considering and taking farmer feedback into account. A further activity for me to report on is connection. I can report that in the last 12 months, Council has facilitated 3 understanding your Co-operative programs. Councilors have run meetings throughout the awards in May and November, and we have assisted in facilitating 3 regionally based beyond the Farmgate's events alongside our Farm Source Team. I would now like to speak to how Council holds the Board to account on behalf of all of its Co-op members. This is done by council seeking board explanation of and responsibility for the company's strategy and performance. We report our areas of focus and questioning of the Board in our quarterly updates so that you have transparency. Council also commissions independent financial analysis from Northington Partners on your behalf. This year as well as reviewing the performance of the '23 financial year. We asked Northington's to provide a longer-term review of Fonterra's progress against the key business targets announced then, following the reset of the business in 2019. It is very pleasing to be able to report that our Co-op is making good progress on its strategy to prioritize New Zealand milk and shift greater volume into higher-value products. 2023's performance was significantly ahead of near- and longer-term earnings-related targets, though it was important to note that an amount of this was due to abnormal price relativities, which are unlikely to be maintained at similar levels over the long term. Fonterra has more than halved its debt in the last 5 years with proceeds from asset divestments, the primary contributor. Cash from operations is largely funded Fonterra's working capital, capital expenditure and shareholder returns and Fonterra's return on capital continues to trend upwards on average over the longer-term. You can read more about what we do on your behalf in our annual report. You should have all received a copy of it via e-mail at the end of last month. I do encourage you all to read it. It is your report written for you. As well as reporting to you annually in our annual report, during the year, we keep you updated through our quarterly updates. These are also e-mailed to you. Moving now to Council's view on the alignment of the company's strategy and performance to members' expectations. As previously mentioned, our leader of members' expectations to the Board categorizes those expectations under 5 headings. Those headings again, our Culture, Performance, Investments, Pride in our Co-op and an Enduring Co-operative. In terms of culture, we continue to observe examples of good culture and Fonterra's interactions with members and council's interactions with the Board. In our recent engagement, our auditors also confirmed to us that they are also experiencing a culture of transparency from Fonterra. However, we believe the most significant gap between member expectations and member perception is around the expectation of genuine consultation on matters, which affect our interest, in particular, our supply interest. We believe this should be more extensive consultation in relation to on-farm matters. Members should not feel that requirements are being imposed without due regard to our farming businesses. Regarding Fonterra's financial performance, it is important to acknowledge that the FY '23 results have been pleasing to members, meeting their expectations. Specifically, a $0.50 dividend and a $0.50 capital return have helped alleviate cash flow issues for [ shared up ] members of our Co-operative. Your council will monitor with interest how performance tracks as price relativities perform -- are revert to more normal levels. Fonterra's investment direction is clearly set out in Our Path to 2030 Booklet. Council acknowledges this year's announcement of 2 new 6-monthly reporting metrics, which are cash operating expenses per kilogram of milk solids and gross profit from core operations per kilogram of milk solids. Council also welcomes enhanced reporting on capital allocation. However, we do believe there is scope to go further. Fonterra could provide greater detail on how members' capital is allocated by region, product channel and key business units. And members have also made it clear that they would like to see more reporting around the investments, joint ventures and partnerships that are announced to Co-operative members from time to time. Regarding Pride in our Co-operative, our 2023 survey results showed 62% of members felt proud to be a member of Fonterra and 70% felt that Fonterra makes a positive contribution to society and meets its social, cultural and environmental responsibilities. Members expect their co-op to help them comply with regulatory and customer-driven requirements placed upon them. Our survey results and your feedback evidence attention developing its Fonterra sustainability story increasingly turns to matters behind the Farmgate. Your council believes there is more work to be done, both to demonstrate to members the value of on-farm regulatory and customer-driven requirements and to ensure that compliance with those requirements is made as easy as possible. The Board has acknowledged this. Finally, Council was confident that members expectations around Fonterra being an enduring co-operative are front of mind for the Board and management. The move to flexible shareholding and the current strategic targets, which align with our long-term focus for the Co-op are examples of this. However, council is concerned about the declining levels of confidence that our survey has indicated in both the future of Fonterra and the future of the New Zealand dairy industry. We acknowledge that many of the factors behind this declining confidence may be beyond the scope of Fonterra's influence. However, we do believe Fonterra does have some ability to influence confidence in our industry and let us through the performance and actions of our Co-operative. Our Board set 10 key performance measures for the '23 financial year. These are set out in the integrated scorecard. 9 of those performance measures were achieved. The one measure that was not achieved was the Farmgate milk price. The final milk price of $8.22 per kilogram and milk solids was below the Board's $9.50 target. You can find our comments on these measures in our 2023 Annual Report. I will now move to the milk commissioner's report. Miriam Radich was appointed as the Milk Commissioner in 2018. Her annual reports are published in council's annual reports. This year, Miriam reported that compared to previous years, there was a rise in the number of matters referred to her as Milk Commissioner. She commented that a good number of those matters arose as or after the supplier relationship between Fonterra and the farmer had ended. In summary, I can report that despite the challenges of the last year, our Co-operative continues to serve the interest of our farmers and their communities well. We will continue to face change in the future. I think we've seen an example of that this morning, and I'm heartened that there is an environment where we can continue to have direct conversations around how best our Co-operative can support us farmers through that change. Council looks forward to continuing to represent your interests. I would now like to speak to Resolution 9, which is to approve the Co-operative council's program and budget for the financial year ending 31 July 2024. This year, Council was seeking shareholder approval for a budget of $2.371 million for council operating costs and $925,000 for other costs contributed to or met by council, giving a combined total of $3.296 million. Based on last season's milk volumes, this equates to [ $0.22 ] per kilogram of milk solids supplied. It is important to note, and I can assure you that council was very respectful of the funding provided by farmers. Our work program is designed to deliver our responsibilities and meet farmer expectations. We're focused on managing our costs whilst being realistic about what's needed to deliver the work program prescribed by the Fonterra constitution in the financial markets research analysis required by the Dairy Industry Restructuring Act 2001. This budget will enable council to deliver the work program outlined in the notice of meeting. Accordingly, I move Resolution 9.

Thanks, John. I'll now call on Mike Montgomerie to second the motion.

Thank you, Peter. I'm very pleased to second the motion.

Thanks, Mike. I'll now open Resolution 9 for discussion. Do we have any questions in the room?

[indiscernible] from the Hurunui. Unfortunately, we're in a position now where we have an area manager based in Nelson and our Farm Support person based in Southland, as a result of the Farm Source restructure. In discussions with management, we were told there was an extensive consultation process that was undertaken. I can assure you that there was no meeting held in [indiscernible]. And now we've got a whole group of farmers who feel disenfranchised. John, in your budget, the representation part is now a key role given you're not involved in performance management reporting anymore. My question is around your budget for the representation role, which is key as a council. And some explanation around the role you played in this process that allowed this Farm Source debacle to be enabled and your involvement there and how you're going to represent our interest given your new program and budget?

Thank you, [ Sean ]. I'm happy to speak to that. And I suppose just a point of clarification on that as well, we still do extensive financial reporting, [ back to members ] members, which you will see in our annual report in the Northington Partners analysis, which we have released to members via e-mail as well. In terms of the Council role, Sean, you're absolutely right, representation is the primary driver of our role as councilors. We're not involved in decision-making, and that is really clearly something that sits with management and the Board. Around the specific example that you have mentioned, when it was announced, council certainly received significant feedback as soon as that feedback started coming in, in line with our role of representation, comments started to be passed through to the Board directly, board members directly, including the Chair of the Board and the Chair of the Co-operative Relations Committee. Given the significance of the amount of feedback that we did receive that was also formally since collated and formally sent through. I will stress again that representation is our role. It's not our role to get in and make decisions or assist them making decisions for the Co-operative. You would have heard in my address, we have spoken about holding the Board to account, and that is an impossible situation for a representative body to be in the situation where we're assisting in decision-making and then looking to hold to account. I will say that going through that process, what hasn't surprised me is the significant amount of or the strength of feeling from farmers in relation to their desire for seeking on-farm support, yes, I think that is a clear theme and the closeness that a lot of farmers work with our Farm source teams. I'm not sure if you've got any comments on that, Peter.

I was just going to just ask Miles, do you have a comment from a management speaking...

No.

Just not any comment, Sean, I think as part of a changing landscape in terms of the skill set that was required to deliver what challenges are ahead of us in the future, and that's what we're seeking to address. Okay, but we get your point. Okay.

[indiscernible] We don't get to sign my feedback on the proposal that's already out there. I would have hoped that a consultation with the likes of our council would have been first and foremost [indiscernible] in terms of developing the proposal before the rollout.

Yes. All right. Any other questions on this resolution in relation to the council budget? Any questions online? One more question here.

I suppose one of the worrying trends -- Tony Wilding speaking here from South Waikato today. As the engagement that is taking place with shareholders when it comes to voting, attending meetings. It seems to be dropping off. Looking for people's confidence, I can understand confidence in [ dairy ] being a little bit low. But the confidence in Fonterra, I feel is lower than I would have expected it to be. So not sure what's happening out there, whether it's just people have got too much else on their mind, they've become apathetic. What is it -- are we -- what sort of feedback are we getting reasons for this that we can address or we just got to accept that we've got, particularly the farms less than 150,000 kilograms, people have lost interest.

I think they are good points that you make. In terms of engagement, it is a primary focus of your council to drive engagement and certainly whether it's -- there are a lot of assumptions or generalizations that you can make but certainly post-COVID, engagement has been more difficult in terms of the numbers of people that have shown up to meetings, whether it's run by your council or whether it's events run throughout our regions. We've seen evidence on this outside of Fonterra as well like some of the other service organizations. We -- every year, we look at our program and our budget in terms of how we can drive engagement. We tried some new things this year in terms of working alongside our Farm Source team to take some of the educational programs that our Co-operative runs out to the regions and targeting them primarily at younger members of our Co-operative. Is the job done in that space? No, I think it's something that we always need to work on. In terms of some of the reasons for the decline in confidence, I think we all acknowledge that it's been a pretty tough time as farmers. Certainly from my perspective on farmer coming at the back now of about 18 months of really tough weather, limited gross growth, rising input costs, rising interest rates and declining forecast Farmgate milk price. So that's brought some challenges. As I mentioned, and I think as Miles mentioned in his address, the key to that is Fonterra performing continuing to perform really, really well to punch out the other side of that. But it's the key work on. We will continue to work on that on your behalf.

Any other questions? No more. This is an ordinary resolution requires 50% support. I'll now put Resolution 9, please complete your voting. Thanks, John. [Voting]

These 4 shareholder proposals were submitted by Mr. Richard Dampney. And Mr. Dampney will now discuss these proposals. Could someone please hand Richard a microphone? Thanks, Richard.

Okay. Thank you. Good morning, everybody. Just before I start, how many people in the room here are actual shareholders that aren't employed by Fonterra or shareholders council. Can you raise your hands, please? I'll get some idea. About 20, interesting. If we had 80, that would be 0.8 1% of Fonterra's shareholders here at the meeting showing interest. So we're a long way short of 1% of our shareholders actually being present in AGM. Why I'm pretty disappointed with the Board, stonewalling my proposals and telling everybody to vote against them, I'm not surprised because you don't have to say you're for it. You just put it out there, and that's what your job is to do. It's not to come out with your opinion because at the end of the day, all the shareholders have -- we are all reasonably intelligent. We actually have a brain. We actually all run a business, which is a reasonably large business, a lot of us. So we do know how to sort things out and to make our own decisions. And sadly, we do not need the board or you guys to tell us what to do, but you seem to carry on doing it. And I find that a particular disgrace actually. It's a shame on you guys. Not one of you actually rang me to ask me why I put these remits up, so that you could go back and ask your fellow shareholders, why I was doing what I was doing or putting the remits forward that I did. And not only that, you didn't -- it's just quite pathetic. Put your hand over your heart and tell me or say to yourself, who are you actually voting for? Are you actually voting for and representing the shareholders in your award? Are you voting for yourself or are you voting for the Board? And if you are voting for your shareholders, that's fine because that's where you are. But if you're doing it for yourself, or for the Board, you have to question why you're actually a shareholders' council. As for the reason I put these things forward, we've just had 2 people speaking to Resolution 9 feeling disenfranchised and disappointed. This is exactly why I've done it because right out there, can you please, Peter, just tell me how many, Peter, we actually voted, online and postal votes? What was the percentage of shareholders?

I don't know because voting is still active now.

What was postal votes to start with?

38% amongst all.

38%, but how many -- how many shareholders was that?

Not sure.

So hopefully, if we're lucky, we'll get over 50%. Would that be?

I doubt we'll get to 50%, but the voting that we see is quite normal for companies...

Well, I don't know, Peter, because we go back to TAF, I can remember when we were trying to put TAF through and some of the voting there. I actually happen to be -- and this is one of the things that may be the shareholders council to think about. We used to have a series of networkers who ran around and chased up all the farmers to make them vote. I was one of those networkers and I had 18 farmers to look after. On TAF, every one of my farmers was actually ended up in the second vote was against TAF. But our shareholders' councilor, he voted for. Because how do I know? Because the shareholders' council came out unanimously in favor of TAF. But everyone, and this is where I, we're in the situation where we are now, where there's a serious disconnect and people are feeling disenfranchised. We've still got farmers leaving the business to go and supply their milk elsewhere. And there's just a serious disconnect and this is why I thought, okay, one of these ways was that we had another couple of elected directors there as opposed to the independents, maybe this will be some way that the shareholders would see that Fonterra as a Board is actually thinking about what's going on. But clearly, they're not. So it's something that we need to think about going forward. I vote for my remits today and or a no vote against Bruce Hassall and Cathy Quinn. It's basically a protest vote for people telling you how they really feel. And I think it's something that you need to look at. Why are we feeling like that? What to think? A lot of the reason is the fact that some of the stuff that you are pushing at us and things like this, like we've got to a stage -- or Fonterra I feel has got to a stage, where exactly what we talked about and guys talked about in TAF, of riding a horse with two a****. You've just given us a record profit. You've just given us the best dividend on our shares that we've ever had. But how do you give those things to your shareholders each year or a record one, and then the problem is the best way to do that and get a record profit is to buy your raw material at the cheapest price you can get. Well, sadly, we are the guys that supply you that as well. So you end up with this problem where you've got to please both. And as was pointed out in TAF, you can't ride a horse with two a****, I'm sorry to say. And that's where you go. So, it's to see where we are. Is that quite a problem because the payout you're giving us at the moment is not really enough there for a lot of farmers. Sadly for me, it's fine because over half of my farmers involve beef and things like that, I'm not a solely a dairy farmer. So -- and I also supply winter milk and things. So the premiums I get, I'm actually still going to operate this year as a profit, but there's a hell of a lot of farmers aren't. But -- where are we? But the other thing is the farmers are sick of the spin and all the stuff that's been given to you. And one of them for me is particularly what's upsetting is why do we need all the [ ethnic ] thing speaking in today and everything else? Okay, I might sound like an all-white racist tall boy, but the reality is, John, what's the name of -- what's the nick name of my son that plays down here?

Your son? I couldn't...

You do. You know it's called [ Abbo ]. I've got a son called [ Abbo ] that's plays down here. His e-mail was [indiscernible] it's actually john [indiscernible] Okay. I've actually, I can show you that my wife is Maori. She is from Ngapuhi in the Hokianga where we're from, but she's also got a father who is a Scotchman. And she's been back to MacRae Castle in Scotland. So don't -- I am racist, I hate idiots, f******, and people who [indiscernible] on things and people who do drugs. You call me racist on that. And I do apologize for the language, but...

Can you address your resolutions, please?

Well, that's why I'm addressing my resolution. And this is only the first one, Peter. I have right to speak to all 4. This is just the first 1, point of order.

It's me, that does the point of order, mate.

No, there can be points of order addressed from the floor.

Address the resolutions, please and then we'll move on.

But they just basically -- they need facts and some honesty like about -- a classic example would be milky boy and milk tanker. You come out with a spin and you tell us how great it is, and it's carried 1.6 million liters of milk for the year. Now when you do the sums on the average milk tanker, which cast 4 loads of milk a day and has probably 25,000 kilos in the load, it cuts 100,000 liters a day. So if you do that over a year, the average normal milk tanker does somewhere between 25 million and 30 million liters a year, whereas good old milky boy -- our fancy new electric milk tanker only does 1.6 million. Well, we all know that it's not really viable to have electric milk tanker. So why don't you come out and say and tell us that it's not really a go and we can't go any more with it rather than having it as a publicity stunt that just goes to sideshow?

Richard, can you address your resolutions, please? I'm giving you an opportunity to speak, and please address them and then take a seat, please and then we'll discuss.

Well, as I've said, I believe that the 2 independents -- we would be better off if we reduce the board by 2 independents as opposed to 1 voted and 1 independent, because it would give something back to the shareholder -- the farmers, and they would feel a lot less disenfranchised than -- they are at present and there would possibly be a little bit more interest shown in Fonterra from the farmers. Because we're at a stage where we really do not know where we're going to be with Fonterra and people are still leaving and some of us have no choice, but to stay with the Board, and we'd like the Fonterra to continue as a strong company.

Thanks, Richard. Before I make some formal remarks in response to your proposals, I do want to thank you for making the effort to come down to the meeting today, and I mean that. We absolutely respect your right to put forward these proposals for consideration by your fellow farmers. From the direct conversation we've had, it's clear that you're a passionate member of our core, and we agree on many of the outcomes that you are seeking. We just have different perspectives on the best way of achieving them. As set out in the explanatory notes of the Notice of Meeting, your Board respectfully recommends that you vote against each of these proposals, and I underline respectfully. Mr. Dampney's proposals and Resolutions 10 and 11 on board size and composition are inconsistent with our Boards -- with your Board's proposal on Resolution 8, which we have been discussing with farmers since September. Your Board has taken feedback and made a recommended proposal to reduce the number of directors on the Board from 11 down to 9, with the composition of 6 selected directors and 3 appointed directors, which maintains the current balance between elected directors and appointed directors. I do believe that the Board's approach strikes the right balance between the level of independence that's required, skills and greater efficiency, while maintaining a strong elected director majority on the board. With Resolution 12, Mr. Dampney is proposing a definition of independent director that is inconsistent with the FSM rules. Our constitution requires us to comply with the FSM rules. The FSM rules can only be changed by the NZX who are unlikely to consider an alternative definition of independent director. With Resolution 13, Mr. Dampney is seeking to disestablish the independent assessment panel. The panel was formed as part of a governance and representation review voted on by shareholders in 2016 and subsequently reviewed in 2019. The membership and operations of the panel are independent of the core. The panel process is designed to provide an independent assessment of candidates, against the skills and experience required by the Board in the any given year. For those candidates who do not wish to go through the panel process and non-assist candidates process runs in parallel, whereby any shareholder who has the support of 35 different shareholders can put themselves forward as a director candidate and be considered alongside the candidates assist by the panel. As referred to in the explanatory notes to the Notice of Meeting, the Co-operative Council also does not support Mr. Dampney's proposals. John Stevenson will now provide an update on the council's position.

Thank you, Peter. Your Co-operative council acknowledges and respects the rights of shareholders to propose resolutions for consideration by all shareholders. I recall earlier this year, Richard, discussing your early proposals with you. In relation to Mr. Dampney's first and second proposals regarding the number of independent and farmer elected directors on the Board, Council supports a reduction on Board size by 1 independent director and 1 farmer elected director, as proposed by the Board and Resolution 8. Council recognizes the value of the diverse views and experiences offered by independent directors. Whilst specialist advice can be commissioned, advisers do not have the same duties and liabilities as directors nor do they fulfill the role of governance of our Co-operative. The Board's proposal maintains the current balance between farmer directors and independent directors and continues to ensure the strong farmer majority on the board that is important to shareholders. The Board has also assured us that workload requirements can be met by 6 farmer directors. Peter made their reassurance again today at this meeting, and that there will be no reduction in the availability of farmer directors to Co-operative members. In relation to Mr. Dampney's third proposal regarding who can be appointed as an independent director, Council's decision recognizes the regulatory requirements around independents, which Fonterra must comply with. In addition, Council does not support the differing voting thresholds amongst independent directors. Council believes all Fonterra shareholders have a pathway to the Board under the current director election process. And as of the view that Fonterra's limits on director tenure are on shareholders' interest and reflect good governance practice. Finally, on the last proposal, the independent assessment process reflects shareholder feedback that an independent view on director candidate capability, skills and experience as valued and could assist voting decisions. Also note that there are protocols in place to ensure the panel's independence from Fonterra and candidates can also stand outside the assessment process if they wish. Just finally, in response to your additional questions, Richard, around councilors and their motivations for the role. I stand by every single one of my councilors, they are certainly in this for the right reasons. Their connection with farmers and members of our Co-operative means that we hear a lot of different views. And certainly, as councilors, they have to bring those views into one place that I can assure you that they do. And our primary role is to represent farmers and members of this Co-operative.

I also just want to address some of the concerns that were raised. The first thing I want to point out is that we have a regulated milk price and the process for going through establishing the milk price is onerous. And we can't just dip our hands into the milk pool and take money and put it into the Co-operative profits. I want to be really clear about that. It's audited twice. EY is on the milk price group. They made recommendations to the milk price panel, milk price panel are further audited by KPMG. So I want to give you reassurance that some of the behaviors that may be suggest that do not occur, okay? Let's be clear on that. Second, I want to just discuss, voter turnout. When you have an uncontested director election, where you don't have big change like capital structure, you get significantly lower voter turnout and lower engagement. That's just a fact of life. Except in the case of [indiscernible] New Zealand, who had 13 candidates and only had 13% farmers turnout. So -- but there's a levy body, and it's much harder to get interest in levy body elections -- and I actually think engagement is our responsibility as farmers. It's our Co-operative. It's not you and us, it's all of us together. And that's really, really important. And I just want to make that point because we are always available for any group. Last week, I was in Opotiki and Galatea because farmers were cut off by weather bomb, couldn't come to our farmer meetings. If people request a meeting with a director, we try to make that happen, and we make that happen at short notice as well. I had a request on Saturday, 2 directors met with the Board of our company recently on Tuesday with short notice requests. So we are available. And it's incumbent on us as farmers to make ourselves available. So I think it's a 2-way street. And for all of us, as members of the Co-operative, we need to encourage and support each other and support young farmers in particular to come along and participate. So I just think their responsibility sits with all of us. Okay. The proposals have been moved by Richard Dampney. I now open resolutions 10, 11 and 12 and 13. All 4 of them. Sorry. Yes.

So to speak, it was only on Resolution 10. I did not speak on Resolution 12 or 13 because 10 and 11 together, I'd not speak on them because initially you gave me that we were only discussing Resolution 10 and 11. Through the rest of the AGM, you have done 1 resolution at a time. Why do I not have speaking right for Resolution 12 and 30, which I have not discussed as yet.

I gave you plenty of opportunity to speak, Richard.

I was only speaking on the first 2 resolutions Mr. Chairman.

I'm controlling this meeting, not you. I've given you appropriate time to address your resolutions on putting all of the resolutions at once. Sorry. No we're putting the resolutions. Richard, do you have a [ seconder ] for the resolutions?

Not in the room. I do not have one in the room.

In terms of process, the resolutions have been put out and people have voted on them. So we'll take them -- I'm prepared to take them. But I'm not prepared to open up again. I'm going to open up the meeting for discussion on all of the resolutions now, okay? So I'm opening the meeting for discussion? Any discussion? Richard [ Stacker ] down here. Microphone 2. Thank you.

It's really important that you've had the courage to put these resolutions to the meeting. I think we've also got to be very careful as shareholders how we put things into our -- to meetings, to public meetings in front of our staff. And also, I think we're going to be very careful with how we treat those that are here to look after us and how we -- and so I think we need to show support for our shareholders, councilors and the people in the room and the Board. But I do value your courage to put these forward. And I think it's an important process, but also would like you to reflect on how your comments may be perceived by the media and also others in this room.

Thanks, Richard. Any questions?

Yes. Thank you, Richard, for the resolutions. I listen to your comments regarding the shareholder council's role? Did you approach the shareholder council to address them -- to perhaps get feedback from them. How has that happened?

I spoke to Richard when those proposals were in draft form. So I would consider that interaction, a yes.

And 2 directors met with Richard as well. [ Yan ], did you have a question or a comment. Microphone 2 over here down the front left in corner.

Now I've got a comment because I'm glad that there is a -- well, a proposal about the independent assessment panel because I think I've been at the base in 2011 of introducing an independent assessment panel. And I've always been in favor of taking that out completely and not having so-called independence -- not being psychologists or really HR consultants on the panel. My proposal -- or my comment on this proposal would be whether it needs to be script or not. I don't think it should be script, but I think it should be changed in its composition and should be completely sourced out to, I mean, professional screening HR agencies.

Did you say sourced out to professional HR agencies? Is that what your last comment?

Yes, -- because I mean, I've been on the Board in Dutch companies, and that's what happens. And it's not like trying to get 3 individuals from different boards of the country.

Yes. So that's the process that we actually follow. So when people submit an application, they submit the CV to an HR company, what's the name?

[indiscernible] Partners.

So, [indiscernible] Partners, screen candidates and assist them and they write a report on each candidate and then give that to the independent panel. So there's a 2-step process. So candidates are interviewed for a couple of hours by HR consultants and then a report is written on the candidate and then that is then sent to the panel for review. So that is the process that's followed. We meet with the panel twice a year. Shareholder democracy and co-operative is paramount, and there's no room for gerrymandering or any nonsense in there. So we respect that process. The panel are fully independent. We meet twice once to say what are the skills that we're looking for. There's 12 key skills to be on Fonterra Board, and we give them 6. So we're not channeling either. So we're not saying here's a limited amount of skills to try and channel a candidate or a prefer a candidate. And so there's 6 given to them. And then we meet again after and we'll meet shortly to review the process. My understanding is there was 1 other applicant this year, but they didn't get through the panel. Okay. I don't know who that was. So it is a good process, but also running beside that, anyone can stand. So, no one should feel that they're precluded from standing, and I think that's an important part of the process as well. Any other questions? Matt, do we have any questions online? No, now I'll now put resolutions 10, 11 and 12 and 13. Resolutions 10 and 11 are special resolutions each requiring 75% support. Resolutions 12 and 13 are ordinary resolutions, each requiring 50% support. Please complete your voting. Thanks. [Voting]

Voting is now closed. For those in the room, collection boxes will be passed around. At this point, we'd like to provide an opportunity for shareholders to question, discuss or make comments on the management of the company or raise any items of general business. I now open the meeting for items of general business. We'll first go to those questions and comments in the room and then take those from online as well. Thanks, Matt. I invite Miles to join me now. Thanks. So any questions or any -- to offer any comments people would like to make. Thanks, Gerard. It's good to see you here.

Thank you, Peter. Thank you, Miles. I remind everybody in the community. I've addressed in AGM over 20 times on this matter and the matter is that I would like Fonterra to consider the recognition of lactose in the Farmgate payment model. I've been stressing this for a very long time for many, many different reasons. The last review was done in 2014. And so it is with the frustration that I'm here 9 years later, still pushing the same button. So that's my frustration. I am optimistic, though, that Andy has given me the opportunity to talk with Fonterra management over this matter. And hopefully, we will have a courageous Board and a courageous team that will go and change the paradigm of milk solids. Prior to 1980, the paradigm was milk fat. In 1980, the dairy board came in and changed the paradigm from milk fat to milk fat and protein. In 1999, the codex for manufacturer of milk powder was changed, and we were allowed to use lactose for standardization. And so using the milk price statement, which the Fonterra holds dear, they acknowledge the notional value or cost of lactose last year was $0.59 a kilogram of milk solids. And the balance of manufacturing costs was just a touch over $2. And so it really perplexes me how a notional cost in the milk price manual of $0.59, nearly 25% of the cost of manufacture is literally ignored. So I'm going to be really, really brave, Peter and Miles, and I'd like you to repeat after me, lactose is not sugarcane sucrose.

Lactose is not sugarcane sucrose.

And the second part is that lactose is the milk solid -- milk sugar.

We don't know that.

All right. And so if lactose is a milk sugar, then it is a milk solid. And I do feel that it's appropriate at this time that Fonterra seriously considers looking at lactose in the Farmgate payment model. It makes up roughly 32% of the milk solids we supply to Fonterra and 42% of the commodity milk price basket.

Thanks, Joe, and I want to assure you that we're going to have a proper review, and it's going to be done appropriately, okay? And I've given you that assurance before. Thanks, everyone. Any other questions, please? There's a question down here, microphone 1. Just second row.

Yes, Tony Wilding here. I think the last 3 years, shareholders have experienced what I call relief. But I think what we're looking for is excitement. When we look at our competitors around the world, their revenue stream year-to-year with revenue number, I won't say it's static, but it just gently waves. Ours is like a sour tooth. And this is where our farmers are most exposed is because we still are a company reliant on an international milk price to deliver a bottom line to farmers. Now I'm not saying we can be a [ tartar ] overnight or aspire to be one. But I just want to give some assurances that the Board no doubt are looking at strategy, looking forward. We've got a strong balance sheet now to see that it is time now to invest in something that will take that sour tooth out over time. And I think we get excited about that because at the moment, I feel relieved but quite deflated. I'm very loyal to Fonterra, always will be. I'm about to exit as a shareholder in a year's time. And I want to have some excitement when I do that, and I want to hear that we do have a plan to actually start to move out those troughs if we can, as much as we can, look more like a [indiscernible], look more like a [indiscernible], look more like a Nestle. Now I know that's a big aspiration to have. And I don't want you to be careless like your predecessors were. I want you to be careful, considered and excited.

Is that a question or -- take it on board, Yes. Do you have any just for comment.

Yes. I mean, look, I'll acknowledge that. And I think it goes without saying that we play in the international market. So we are, of course, at the whim of where those markets go. But I'll take your point that if we continue to invest in the things that can take out the variability around milk price, that will certainly help. But we've also got to recognize and acknowledge the invested capital that's been invested over many generations to get us to this point. And so -- and that was on the back of significant milk growth that happened in the early part of the 2000s. So to simply turn that off, there's a significant cost to that. It doesn't mean we won't continue to invest in value-added streams of our business, but we also need to recognize the significant invested capital we have in commodity drivers as well. So that will evolve over time, but your point is very well noted.

The other challenge is we've got to focus on what we can be the best in the world. And so I think that's the starting point as well. So just reinforcing Miles comment. Any other questions, please?

Question for Miles. Recently, Miles, you said there was a potential for $1 billion in savings between now and 2030, identified savings. Is that correct?

Yes.

Well, okay, that's a thing because if you've identified them, it means they're already there. So why can't we make them before Christmas? Or are they just perception or maybe?

Yes. So I mean the $1 billion has worked up I guess, if you look to those 2 metrics that I referred to earlier, 2%, operating cash improvement, 4% across -- sorry, 4% operating and 2% through manufacturing. That will require, over time, our product mix to change. We've also seen in some parts of the country, milk flat will decline. So that will result in some discussions we're going to need to have about certain plants across our business. Simply at the moment, we're almost in sort of peak day across the country as we speaking out. We can't bring forward any of those decisions fast because we simply wouldn't have an ability to process milk. So it's not simply costs that are sitting in an office in New Zealand or around the world that I'm referring to, it's about how we pick up, process and collect and process your milk. So that's a whole lot. I'm confident we have the plans in place to get to where we need to be by 2030.

It's a good target, and it's a transparent one, and that's one the council has been asking for, for a while, John. So we think it is good. I mean you can't just take $1 billion of cost out of it all of once, it doesn't happen like that in the real world. There's a question down here, Thomas is wanting to ask a question on the second row at the front. Microphone 1. Thanks, Thomas.

Thank you, Mr. Chairman. May I first congratulate New Zealand on beating Ireland?

Was it us or Wayne Barnes...

We give you the benefit of the doubt. And then may I point out that Ireland were the only team to beat the World Champions. I -- they only asked me to be concise.

Please, sir, with respect.

I was looking our outlook [indiscernible] continent and the key -- but the time value on what's happened in Derby. And then I note that the EU and New Zealand [indiscernible] was limiting the amount of milk and putting constraints on farmers on how they produce. I'll only give 2 examples, in New Zealand, I won't speak of Ireland. There's no permission for extra cows and if you want to put young stock on new land and consolidate your farm, you have a problem. Fonterra need to challenge that. I'm sorry, as blunt as that and I want to comment. Until today, I often thought that the chair was quite blunt. I'm saying I'm putting down a proposal. I congratulate you, Mr. Chairman, on the time you gave Mr. Dampney for his proposals. At the end of the day, they were very little different than what you yourself were proposing. Maybe you shouldn't have been as solid and as blunt as to how you put them down. There wasn't a lot of difference. Now I'm proud to say that I was a founder member of Fonterra. And all of me goes to Fonterra. And there are many deals in the last number of years that we lost millions by staying with you, including the drop in the value of our shares. On the 6th of October this year, you published that you bought 20,000 shares at [ $2.25 ] and that you would see what you're doing weekly thereafter. I have looked at your statements, Mr. Hurrell, every day, and there's not 1 mention of it since. The price was [ $2.12 ] yesterday, and it's [ 2.16 ] today. What is your policy? Is it that you are going to buy shares? Are you going to just not support it when you see fit? The people who will have to sell shares have been loyal people to you for a long time. And my personal opinion is that there needs to be a fund there to put a button on that share price. Because as I said last year, depending on the market for farmers to buy shares will only happen when there's $9 and $10 payouts. Thank you.

Thank you. Simon, do you want to comment on the market and our position in the market and why at times we are in the market and at times, we are unable to be in the market for certain reasons?

Thank you. Thank you, Peter. So you're right in terms of the share buyback. We have said over a year, we will look at times to potentially buy those shares where we see long-term value for the co-operative. I think one of the key things that we also want to have on that program is that we are not looking to unduly influence the price. So if we are buying or participating, we still want the market to be set by farmer shareholders. So there will be times when we do participate and at different times of levels of liquidity. There are also times naturally where, as you know, when we go into annual result periods, or coming up to business updates, quarter 1 periods that we naturally don't participate in that as well. So it's not always continuous and -- but there are times when we will, we won't, and to your point we will obviously keep you informed and announce when we do that.

So there is times when we're unable to buy shares, Thomas. And the rules around disclosure are really onerous, and we have to be really thoughtful if we are -- the Board's position of information that would impact on the potential value of this year. If we're not under a continuous disclosure regime, then we can't participate in the market, it's inappropriate for us to do that. So those are some of the rationale for the challenge in that regard. In regards to your comment at the beginning about Fonterra, having views on some of the compliance challenges. We do have strong views on that. We don't do that in the media, okay? We have conversations with -- when the door is shut, with government officials. We have a role to play. We are regulated and we need to maintain a positive working relationship with our government. And we are bipartisan as well. So we're not aligned to any party. So it's important that when the governments in power, that you also built a deep relationship with the opposition at the time, and you maintain those relationships over time. I've found my experience as you're more effective when you work positively with people and taking them on publicly, a negative way. But I understand the challenge that you have. And I think some of the point that you raised is affecting underlying sentiment as well. One clear example is National Freshwater standards that seem completely unachievable as farmers. And when you make a standard so difficult, then people just go like that. So it's really important that people work with people and support them because farmers do want to do the right thing. We do want to do the right thing. But I take your comments on board. Thank you. Any other questions? Are there any online, Matt? Okay. If there's no further matters or any more questions? Okay. We'll now bring to a close our general business part of the meeting. Before I close the meeting, I'd like to acknowledge the recent Fonterra director election results. On Tuesday, it was announced that the incumbent director is Cathy Quinn and Brent Goldsack had been reelected to the Fonterra Board. I'd also like to acknowledge the reappointment of Bruce Hassall and Holly Kramer to the Fonterra Board. I'd like to thank you all for attending today and to invite those in the room to stay with us for lunch. Also, I just want to make a couple of comments in relation to some retiring councilors. So, Nacre Maiden, 3 years on Council. I want to say thanks for your effort. Greg McCracken, 7 years, who will be remembered for ringing the bell. So thanks for your contribution, Greg. And Mike Montgomerie, 5 years, and I first met Mike in a [indiscernible] meeting around governance and the election process. Mike's putting a huge effort on your behalf as shareholders in relation to governance, and I just want to acknowledge that, Mike, and say thanks to all of you for your effort, and it's not an easy role being in council. It's a very difficult role, and I want to acknowledge John and all of the council in the role that they do. So, we'll share the results of the votes as soon as possible. That concludes the business of the Annual Meeting of Fonterra. I'd like to ask Justin Tipper to now close our meeting with a [Foreign Language] Thanks, Justin.

[Foreign Language]

Thanks, Justin. Thanks, everybody. The meeting is now closed.