The Netherlands: Royal FrieslandCampina – new member financing

The Holland headquartered dairy cooperative Royal FrieslandCampina proposes a new member financing. At the heart of the proposal is the linking of a significant part of the members’ capital to their milk deliveries and a cooperative solution for the tradability of free member bonds. The cooperative proposes to issue eight euro worth of supply certificates per 100 kilogram of milk delivered to its member dairy farmers. Members who have less than eight euro per 100 kilogram of milk in fixed member bonds and/or member certificates will be allowed to ‘bed in’ over a period of ten years by means of a loan provided by the cooperative. In connection with the introduction of delivery certificates, the cooperative proposes to adjust the company’s retained earnings policy as well. The current retained earnings policy consists of a supplementary cash payment of 35 percent of the profit, 10 percent in member bonds and to add 55 percent to the retained earnings. The provisional proposal is to pay out 40 percent of the profit over the financial years 2021 and 2022 as a supplementary cash payment and to add 60 percent to the retained earnings. The new member financing system is necessary to ensure the future tradability of member bonds free, to reduce the imbalances in members’ capital commitment and to strengthen the company’s equity, according to RFC.

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