Fonterra is just a corporation. It is a corporation owned by other corporations. Fonterra, and the corporations that own it, all have a single purpose: maximising financial returns to its owners.
Once you get your head around this simple and obvious reality, it is easier to understand their behaviour and see through all their public relations about caring for family farms, climate and rivers etc etc.
Fonterra is a machine for making money for its owners. Period. It is not good or evil. It’s not that it hates rivers and the climate, it is uninterested in rivers and climate. Fonterra is simply designed to maximise returns for its owners and will do whatever is necessary to achieve that, including polluting rivers and the climate if that is legally allowed.
If we want to deliver on our collective values, like having clean rivers and a liveable climate, then we need to regulate corporations like Fonterra, to change what is legally allowed. We need to create a legal framework in which Fonterra is legally required to reduce its climate and water pollution. It can still make a profit, but must do so within environmental limits.
We need to drop the fairytale that corporations somehow care about societal values. Corporations are neither good nor evil, they seek profit, and we need to create laws that mean they can only profit within community set boundaries.
A limited liability company
Fonterra’s legal structure is a limited liability company, ie a corporation. It is by far the largest corporation in New Zealand with annual revenue of $27 billion in the 2025/26 financial year and a market capitalization of around $14.4 billion in October 2026.
Like all corporations, Fonterra has a single objective which is to maximise financial returns for its owners, within the limits of the law. There is nothing sinister or unusual in this – it’s simply how capitalism works.
As British Lord Chancellor Edward Thurlow said in the late nineteenth century: “Did you ever expect a corporation to have a conscience, when it has no soul to be damned, and no body to be kicked?”
Fonterra does not have a moral compass, it is a machine for making money. The Directors, CEO and senior staff of Fonterra are all bound by the legal requirement to maximise financial returns. Their remuneration and promotion prospects are linked to meeting these financial objectives within legal limits.
Ownership
The ownership of Fonterra’s shares is unusual in that they are mostly owned by its 9000 milk suppliers, though up to 10% of its shares can be owned by non-supplier investment companies (currently around 6.7%).
The milk supplying entities that own most of the Fonterra shares are themselves corporations, though some of the smaller suppliers are legally partnerships.
Some of the dairy corporations which supply and own Fonterra are themselves very large companies. Dairy Holdings Limited for example has assets of over $1 billion, owns 90 different properties, 55,000 dairy cattle and produces 33 million kilograms of milk solids. The large dairy corporations that own Fonterra are not family farms.
All these dairy corporations, which own the Fonterra corporation and supply it with milk, also have the sole objective of maximising financial returns for their owners, within legal limits. They are money making machines that own the larger money making machine.
Ownership inequality
Within Fonterra, the largest dairy supplying companies control the majority of the shares. The ownership of shares is linked to milk production, hence big producers with 50,000 to 60,000 cattle have more than a hundred times as many shares as the median producer with 400 cattle.
This inequality in share ownership, linked to inequality in milk production, is further amplified by the rules that allow milk suppliers to own a variable number of shares. Milk suppliers can own anything from one third of a share for each kilogram of milk solids (kgMS) they supply, up to four shares per kgMS. This means that dairy companies with the same size herd can have a twelve fold difference in Fonterra shares they own. This variable ownership of shares tends to increase inequality as smaller producers tend to have fewer shares per kgMS, as they are capital constrained, while large producers do the reverse as they see Fonterra shares as a lucrative investment.
The result is that ownership of Fonterra shares is very unequal. But exactly how unequal?
Fonterra’s sale of the Mainland Group in 2026 required the publication of a set of company documents that gave us a window into the Fonterra share ownership structure, which is otherwise opaque. This allows us to make some educated judgments about the distribution of ownership. From this we can conclude that the top 10% of the corporations that own Fonterra shares control around 50% of Fonterra shares. These 900 corporations are large, with assets up to over one billion.
The owners of these corporations live in the wealthy tree-filled suburbs of Auckland, Queenstown, Tauranga and Christchurch. Wairakei Pastoral Ltd, for example, is a massive polluting dairy company based in Waikato. Based on information provided by the Companies Office, we know that Wairakei is owned by a series of holding companies whose ultimate owners are rich-listers residing in the Auckland suburbs of Remuera, Parnell, Paraitai Drive Orakei, Newmarket, and Auckland City and in Queenstown.
They drink clean water, they don’t smell the polluted rivers, they don’t milk the tens of thousands of cows, they don’t see the distressed cattle, they don’t kill off any of the two million bobby calves each year. They don’t spend their days in fields denuded of trees, stinking hot in the summer heat and freezing cold and muddy in the winter rains. The owners of the corporations which own Fonterra have little connection to the farming operations they control, beyond receiving the profits in their bank accounts.
The bottom 70% of Fonterra shareholders own less than 20% of the corporation. The small family dairy farmer who lives on the farm, has a connection to the land and drinks the water, has a vanishingly small influence on Fonterra. The main job of the ‘family farmer’ is to front the public relations campaigns for Fonterra.
Public relations
Fonterra opposes efforts to place legal constraints on their water and climate pollution because it would constrain their profits. But that is not a winning argument in the public debate so they need to come up with a better story.
Hence Fonterra spends many millions on a public relations strategy which pushes the narrative that Fonterra is just a collection of small family dairy farmers who really care about the environment and are working to make things better, and hence implicitly there is no need to regulate them.
Fonterra publications are full of regular looking wholesome people who want to do good. They run a series of voluntary freshwater and climate programs to do good and have voluntary pollution reduction targets. They tell us that they understand that they can have an effect on the environment and they are doing everything they can to improve things.
Of course there are family dairy farmers who do care about the climate and the water, but they have virtually no control over Fonterra. In reality Fonterra is a $27 billion corporation controlled by other massive corporations with the sole purpose of maximising financial returns to its owners.
While Fonterra is placing millions of dollars of ads about environmental commitments, the most recent annual report revealed that Fonterra increased its annual climate pollution by one million tonnes in just two years. One million tonnes annual increase. That is the reality.
And Fonterra suppliers are adding 25,000 to 35,000 new dairy cattle on the Canterbury plains in 2026, which will increase profits and water pollution. That means thousands of tonnes more nitrate pollution for the rivers and lakes and drinking water in Canterbury. That is the reality.
In a 2024 Southland court case over rules to limit dairy pollution, Fonterra’s lawyers opposed any limits and claimed “no evidence has been presented pointing to diffuse farming discharge(s) either individually or cumulatively causing [significant harm to aquatic life]”. This is what they say in court when it really matters. Incidentally the judge didn’t believe them and ruled against Fonterra, so Fonterra lobbied successfully to get the court decision overturned by legislative change (section 70 and 107 of the RMA were gutted).
The Fonterra PR narrative of family farmers improving rivers, cutting their climate pollution, while acknowledging their impact, is entirely at odds with reality. The purpose of the greenwashing is to block laws and regulations that would actually force them to cut pollution.
Lobbying
Like all large corporations, Fonterra lobbies for laws and regulations that allow it to maximise financial returns. It will often do this via the industry lobby group Dairy NZ or alongside it.
Fonterra lobbied successfully for law changes to weaken protection for rivers and lakes, by gutting the National Policy Statement on Freshwater Management. It successfully lobbied for law changes to remove the industry’s obligation to pay for climate pollution under the Emissions Trading Scheme. And it famously actually wrote the law that the government introduced to retrospectively block a court case in which Fonterra was being sued for the harm done by its climate pollution.
Fonterra didn’t lobby to weaken environmental protections because it hates nature, it doesn’t care either way, it did it to maximise profits and it just happens that nature will be destroyed along the way.
Laws matter
The Fonterra corporation, and the dairy corporations that own Fonterra, often talk about caring about non-financial objectives such as clean water. But the legal reality is that they only have a financial objective and any purported non-financial objectives are legally subservient to the financial objective. This means that when a dairy corporation faces a decision of whether to increase cow numbers, which will increase profits but diminish freshwater quality, then the company will increase cow numbers, so long as it is legal to do so.
However, if laws and regulations are changed, for example to limit cow numbers to protect freshwater, or by putting a price on climate pollution, then that will change the legal and economic reality in which they can maximize financial returns. This will actually change Fonterra’s behaviour.
But fine words and voluntary targets are just that – they cannot overturn the primary financial purpose of the corporation – and that of course is why corporations are quite fond of fine words and voluntary targets.
In this time of climate and biodiversity crisis, we need to truly understand the legal entities that are killing life on earth. These entities are not inherently good or evil, they are corporations which by design have a single purpose, to maximise financial returns. Voluntary measures or good intentions will not change their behaviour – only legally binding laws and regulations will change what they do and deliver the world we collectively want, one where the climate is stabilised and nature is protected.
