A new report claims the capital restructure of Fonterra, New Zealand's biggest business, will cause its farmers a short-term loss of $4 billion, strengthen the dairy company's market dominance and push up the price of chilled milk at the shops.
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A new report claims the capital restructure of Fonterra, New Zealand’s biggest business, will cause its farmers a short-term loss of $4 billion, strengthen the dairy company’s market dominance and push up the price of chilled milk at the shops

The Castalia report commissioned by Fonterra export rival and the country’s second-biggest dairy processor Open Country says it will also probably fuel land prices

Open Country hired Castalia, a global strategic advisory firm, to examine the impact of the proposed restructure on Fonterra’s share price and on competition between dairy processors for milk supply.

In summary, the report said the proposal would likely collapse the price of Fonterra shares and shift significant wealth from current farmers to Fonterra itself.

Fonterra said it had not seen the report and was not prepared to comment in detail without reading it.

Fonterra says the outlook for dairy is positive, and the co-operative has released an upbeat forecast for its full-year profit.

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