Members’ Council FrieslandCampina agrees with adjustment of reservation policy

Decision process Member Council Zuivelcoöperatie FrieslandCampina U.A.

21 December 2016

On 20 December 2016 the Members’ Council of Zuivelcoöperatie FrieslandCampina U.A. agreed with proposals from the Board for adjustment of the reservation policy, the milk price system and abolishment of the quantum premium. This was the last Members’ Council chaired by Piet Boer, who handed over his chairmanship to Frans Keurentjes.

Reservation policy

The adjustment of the reservation policy include that, as from the financial year 2017, 55 percent of the profit of Royal FrieslandCampina N.V. will be added to the general reserve of the company (this was 45 percent), 35 percent will be paid to the member dairy farmers as performance premium for the milk supplied (this was 35 percent) and 10 percent will be paid to the member dairy farmers in the form of member bonds (this was 20 percent). This adjustment is a result of the three-yearly evaluation of the reservation policy. The objective of the adjustment is to strengthen the equity capital of FrieslandCampina.

Guaranteed price system

The guaranteed price system was evaluated in 2016 and it was established that the current system is working well. The weighing of the countries/companies that are taken into account in the calculation will be updated for the coming three years and the average company volume will be adjusted to 800,000 kilos of milk per year. With respect to the organic guaranteed price, next to updating the weighting of the countries/companies in the calculation, Austria will be added as reference country.

Outdoor grazing premium increased from 1.00 euro to 1.50 euro

In order to stimulate outdoor grazing, the outdoor grazing premium will be increased from 1.00 euro to 1.50 euro per 100 kg milk. The increase of the outdoor grazing premium by 0.50 euro per 100 kg milk will amount to an expected total of 29 million euro to be financed by the company. Farms applying herd grazing may participate in the outdoor grazing scheme as from next year, provided that individual cow registration takes place by means of outdoor grazing gates or GPS cow recognition.

Seasonal scheme for regular milk to 0 euro

The seasonal scheme for regular milk will be frozen at 0 euro. During the evaluation, it appeared that member dairy farmers do no longer take the seasonal scheme into account in their operational management and that therefore a financial incentive has become useless. However, members producing organic or biodynamic milk do reckon with the seasonal scheme. It was decided to maintain the seasonal scheme with the current rates for these milk flows.

Quantum scheme abolished

The quantum scheme will be abolished as from 1 January 2017. The underlying idea of the quantum scheme was to remain attractive for large businesses. The evaluation showed that the scheme is no longer required for this purpose.

Interest rate for member certificates and member bonds

The interest rate of the six-monthly EURIBOR interest payment for fixed member bonds, free member bonds and member certificates will remain unchanged with 3.25 percent for the period from 1 June 2017 up to and including 31 May 2020.

Changes in the Cooperative Board

Piet Boer, who resigned in accordance with the articles of association and is not eligible for reappointment, stepped down as Chairman of the Cooperative Board and the Supervisory Board. He is succeeded by Frans Keurentjes, who has been a member of the Cooperative Board and of the Supervisory Board of FrieslandCampina (and its legal predecessors) since December 2006. Simultaneously with the resignation of Piet Boer, Simon Ruiter, who resigned in accordance with the articles of association and is not eligible for reappointment, stepped down as a member of the Cooperative Board and the Supervisory Board. The Members’ Council thanked both for their longstanding commitment.
Erwin Wunnekink will succeed Jan Keijsers as Vice-Chairman of the Board and Vice-Chairman of the Supervisory Board. Jan Keijsers, who was Vice-Chairman since 16 December 2014, will remain a member of the Cooperative Board until December 2017, when he will resign in accordance with the articles of association and shall not be eligible for reappointment. Hans Hettinga and Gjalt Mulder joined the Board on 20 December 2016. Both gentlemen also became members of the Supervisory Board of Royal FrieslandCampina N.V. on this date.