FONTERRA, FARMERS AND FARM SOURCE... TOGETHER AS ONE MAKING THE MOST OF OUR CO-OPERATIVE STRENGTH

Eight farmers came together And we want to support you in in 1871 to form the country’s your continued success on farm, first dairy co-operative. Now, so we’ve put together Farm Source, 10,500 Fonterra farmers supply a way to give you new levels of high-quality milk to millions of rewards, service, information, consumers around the world, financial options and support. every day. It’s all about making the most The milk you produce is the of the unity and strength of our cornerstone to Fonterra’s future. Co-op, in the same way we did It’s how our Co-op has grown back in 1871. From the past, from eight farmers to becoming to the future. a globally relevant co-operative. LETTER FROM FARM SOURCE FARM SOURCE 4 JOHN AND THEO 10 HUBS 16 ONLINE CONNECTING WITH OUR YOUR LOYALTY FINANCIAL 6 CO-OPERATIVE 12 YOUR REWARDS 22 TOOLBOX FARM SOURCE REGIONAL BUYING POWER = 8 TEAMS 14 SAVINGS POWER

1 WE’VE GROWN STRONGER AND BETTER BECAUSE OF OUR MILK. IT’S THE KEY TO OUR FUTURE

All around the world, people are asking for more and more of our high-quality dairy products. We’re looking to fill that demand, and to become a globally relevant co-operative making a difference in the lives of two billion people around the world. To get there, it’s all about the milk. And it all starts here in New Zealand – our number one priority.

2 3 ON A PERSONAL NOTE

We’ve developed Farm Source to And we are bringing you the full Farm Source will be a global brand, support you – our owners. We strength of our global Co-op, so eventually we’ll be rolling it out want to help you make the most without losing sight of the Co-op’s around the world, but it will always of the access you have to the grass roots. be connected at its heart to the exclusive benefits of being part of home of Fonterra. We’re building Our strength has always come a Co-op as strong as Fonterra is. ‘Our Place’ in each community – from all of us working together. We also want to help you take your hubs where everyone can come Farm Source is all about farming business from strength to together to do business, buy connecting with and supporting strength, to take advantage of local product and access exclusive deals. our farmers on a whole new level. knowledge in your region and be It is our collective strength, put to Farm Source is about connections. able to access a whole new world work for you on the farm and in It’s not just Fonterra to you – it’s of information and advice. the community so that you can you to the community. It’s all of us, Farm Source was developed after grow and we can grow – together. together as one. listening to you. You told us we We want to tap into the collective could do more to take advantage of buying power of the Co-operative our strength to help you get better and pass these benefits on to deals on important farm costs. With you. That includes better deals on farmers cash flow under pressure, important farm costs such as fuel, every dollar counts and there is no telecommunications and energy, JOHN WILSON better time than now to launch this. and you’ll be rewarded whenever We are bringing you more regional you buy farm supplies. farmer facing roles. We are bringing This is just the start – there’s plenty you more financial options to more to come. manage your business with us. THEO SPIERINGS

Fonterra Strategic Platforms

1. Optimise New Zealand Milk

2. Build and Grow beyond our current consumer positions

3. Deliver on Foodservice potential

4. Grow our Anlene business Farm Source will sit alongside our five other 5. Develop leading positions in paediatric global brands: Fonterra, and maternal nutrition NZMP, AnchorTM, AnleneTM and AnmumTM. 6. Selectively invest in Milk Pools It will bring benefits to farmers and link us all to our local communities. 7. Align our business and organisation

4 5 CONNECTING WITH OUR CO-OPERATIVE

Farm Source will be our face and place in the community, combining farm support, financial tools and the advice farmers need to grow profitably with us. It’s a global initiative with a local approach.

Our Place It all starts here. New Zealand But the regional touch will go The new Farm Source online is an milk is #1 and we are rolling out much further than your local expanded source of advice, tools Farm Source Hubs throughout the Farm Source Hub. and information to help you monitor country, creating a place where your farm operation, manage your So many people work with you in we can connect with each other financials, buy supplies and check some way within your region. And and the community. As a Fonterra out your rewards. you can’t put a price on their local farmer you already own an knowledge. We’re taking a team It’s a big upgrade – it’s faster, cleaner extensive rural supplies network, approach so you get plenty of and easily accessed on your mobile, with around 90 per cent of support, but in a more streamlined computer or tablet. And this is just our farms within 25kms of a way – from people who understand the beginning. local branch. regional conditions, council With Farm Source online you’ll find We’ll be converting our RD1 stores regulations and what’s important a financial toolbox so you can better to Farm Source Hubs and they will to local farmers. manage your shares, your capital be our touchpoint in each region. and your business. This includes our They’ll feature farmer facilities, such Farm Source is not just at the Hubs Dividend Reinvestment Plan, Invest as meeting rooms and a drop-in – it’s also online, on mobile and on As You Earn (a bit like KiwiSaver, space where you can talk to others, demand. but you can use your milk cheque have a coffee and recharge your to buy shares), and a process where batteries (including the one in your Technology is more and more you can share-up over time. phone). important to the future of farming, so we’ve given Fencepost an Farm Source brings together all You’ll also have the farm supply overhaul. We know that nearly the benefits of being part of our services you need right there on 90 per cent of you are online Co-operative and delivers them to site – including exclusive prices and daily, checking milk quality and you at home, online, and in your discounts we’ve negotiated just for production information, and our community. you. Every purchase you make earns milk production app we launched you Farm Source Dollars ( ), which earlier this year has more than Let us know what you think. We’ll be build up with each purchase and 5,000 users already. upgrading all the time, bringing you can be redeemed at our Hubs or on more useful resources, information the website for Farm Source store and online tools. vouchers, services or experiences, including travel.

6 FARM SOURCE BRINGS TOGETHER ALL THE BENEFITS OF BEING PART OF OUR CO-OPERATIVE. IT’S EXCLUSIVE – AND IT’S CREATED JUST FOR YOU.

MOBILE

ONLINE

CANTERBURY ON FARM IN THE COMMUNITY

IN STORE

7 FARM SOURCE REGIONAL TEAMS

Every farming region is different. That’s why we’re working on ways to give you better, more streamlined support from people in the know. People who understand the region you live and farm in, your council’s regulations, the local business leaders and the different conditions.

Local knowledge is everything So many people work with We’re strengthening our regional when it comes to farming success. you in some way – store staff, networks, increasing our regional Southland isn’t Taranaki any more tanker operators, service centre, knowledge and creating stronger than Northland is Canterbury. Area Managers, Shareholders’ links between Area Managers, So we are taking a regional Councillors, Sustainable Dairying Technical Sales Reps and farmers approach to Farm Source and Advisors, Technical Sales Reps, – all to deliver seamless support you will see the colours of rural the Vat Assets Team, Food to you. There’ll be more resources regions reflected on our Farm Safety Advisors and your than ever within your region to Source Hubs and tankers. local Networkers. help with everything from your production plans to solutions The people you work with need We’re taking a team approach to that meet your farming needs. to know your region inside out. get you plenty of support, but You’ve let us know you value the in a more streamlined way from support and advice from Fonterra, people who understand regional but there’s also a need for more conditions, council regulations and co-ordination within each region. what’s important to local farmers. So we’re taking a regional approach – one that will go much further than your local Farm Source Hub.

8 NORTHLAND

BAY OF PLENTY WAIKATO

TARANAKI

CENTRAL DISTRICTS

CANTERBURY

OTAGO

SOUTHLAND

Strengthening our community roots

9 FARM SOURCE HUBS

Our Place – that’s a good way Off farm, it’s about us helping you Imagine a place to describe a Farm Source Hub make more of your time. Our Farm that brings together which will provide a totally new Source Hub is your place in town. exclusive approach to support You can book a meeting room to the great service, our farmers. We already have an catch up with your accountant or prices and range existing farm supplies network your Farm Source regional support with 67 RD1 stores (and four team members. You can drop in for offered by your more in development) spanning a coffee, use the free wi-fi to check communities across New Zealand. your emails, or have a chat with local Fonterra rural They’re a natural magnet for a neighbour. The larger meeting supplies store with Fonterra farmers who own the spaces will be the base for Ward business. We are doing a lot more meetings, seminars, shed meetings facilities you can with the network to support you and roadshows. on farm and when you are off farm. call home. As a Fonterra farmer, you will On farm, it’s all about getting the have exclusive deals in store. The best deal on the products you specials for Fonterra farmers will need, season by season, backed be clearly marked with the price up by technical advice in key areas and the savings. The special Farm like animal nutrition and support Source pricing on key products services like stock trading. It’s each month will be exclusively about getting rewarded for your available for you in store and you spending in the farm supplies can also buy them, and anything network you own. else you need, from your Farm Source Hub online. Expect great prices in store, so you can reduce costs on farm.

Our farm supply network is undergoing a transformation and that includes a fresh new look. But you won’t need to wait until we roll this out in your local community. The majority of the Farm Source Hub benefits are here right now, with the new look rolling out over the next two years.

10 ELEVATION 3

OUR PLACE

CANTERBURY CANTERBURY

ELEVATION 1

CANTERBURY

WELCOME TO OUR PLACE CANTERBURY

Option to paint the gradients on this wall panel, if not vinyl gradients will be added over light green paint.

OUR METHVEN. OUR OUR OUR PLACE. METHVEN. METHVEN.

Indicative only 11 YOUR LOYALTY, YOUR REWARDS

The Farm Source Rewards card is your ticket to rewards and exclusive offers. All Fonterra farmers will receive a Farm Source Rewards card and with it automatic access to exclusive discounts and benefits.

The card can be used at your receive discounts on key farming local Farm Source store or at key costs from our partners. partners where you’ll get great We will continue negotiating deals. Each time you shop with This is your Farm Source discounts for you but here’s Rewards card. It’s exclusive Farm Source or our partners and a couple we’ve secured now: to Fonterra farmers and use your card, you’ll earn Farm opens the door to the Source Dollars. benefits of belonging Save over 40% on Ecolab XY-12 to our Co-operative. Getting your card Ecolab is a significant partner All Fonterra farmer shareholders, of our Co-op, providing both you sharemilkers, contract milkers, and our manufacturing sites with farm managers and farm a range of products that support staff are eligible for the Farm the high quality of our milk. Source Rewards card and its benefits. Cards will be sent out From 1 October 2014, you’ll be automatically for you at the start able to save over 40% on of November 2014. There will be Ecolab XY-12, while stocks last. an opportunity to personalise the card and to get a second card for Save at the Mobil pump your family before then. When you get your Farm Source Rewards card Mobil Oil is New Zealand’s you’ll have immediate access to oldest oil company and as it’s some great discount offers. a longstanding partner of our Co-op, we’ve been able to secure Discounts an exclusive deal for you. With your Farm Source Rewards With your Farm Source Rewards card you can save, both with the card, you can now buy fuel at Farm Source Hubs and with our a discount of 18 cents per litre partners. Each month, Farm Source from the 170 Mobil-branded Hubs will offer exclusive deals to service stations, from Fonterra farmers. Farm Source 1 November 2014. Rewards card holders will also

12 FARM SOURCE DOLLARS

Unlike other rebates, you don’t Farm Source Dollars build up with When you spend have to wait all year to get your each purchase, earning you up to with us, you’ll share and you’ll get the full value one for every $50 you spend in owing to you. You’ll be able to store (conditions apply). You’ll earn earn from us. redeem these dollars at any time Farm Source Dollars on everything For every dollar from December 2014 for your farm you spend with us in store – business, yourself, your family or fertiliser, nutrition, electricity and spent with us your community. Farm Source more. Over time, you can save Dollars can be converted to thousands of dollars with . and our partners, Farm Source store vouchers, you’ll automatically products, services or experiences, earn Farm Source including travel.

Dollars ( ) – giving How Farm Source Dollars ( ) can work for you you a share of returns from SPEND THROUGH STORE the rural supplies BUY network you own. FEED

ORDER FERTILISER 3,500

SORT An example of LIVESTOCK Rachel and John’s .

BILL FUEL AND PARTNERSHIPS

Rachel and John are farmers with a herd of 350 cows. The team at their local Farm Source store take care of most of their farm supplies, including their annual feed and fertiliser needs. Rachel and John also bill their electricity and fuel through Farm Source partners, so they’re saving money at the same time as earning Farm Source Dollars. From what it takes to run their farm, Rachel and John expect to earn 3,500 each year, which they plan on using to book a well-earned holiday. Not bad for money they were going to spend anyway and this is in addition to the solid Farm Source Hub’s financial return to Fonterra and the great discounts on key Farm Source deals.

13 BUYING POWER = SAVINGS POWER

We’ve got a lot of members in our Fonterra family. Together, that represents a great deal of buying power.

But there are other ways we can use our collective strength. For example, Farm Source will aggregate farmers from around OCTOBER DEAL the country who are seriously looking at big capital items like a new tractor or farm vehicle. If we get together, we can negotiate a group deal on your behalf. Farm Source Dollars ( ) You’ll automatically earn Farm Source Dollars when you shop with Farm Source or our partners from October. And you’ll be able to redeem Farm Source Dollars any time you want for Farm Source store vouchers, services or experiences including travel. Farm Source Dollars give you a share of returns from the rural supplies network you own. But unlike some other rebates, you can use your Farm Source Dollars straight away, you don’t need to wait all year to benefit, and you’ll Save over get the full value owing to you. 40%

14 On Farm Fuel Health Insurance Save up to Save Save up to Save up to Save over 30% off 23c/litre 18c/litre 25% $20/month 10%

Holden Mobil Spark Save 30% on the purchase or Save 18 cents per litre at the Save up to $20 per month lease rate on a Colorado LT Mobil Service Stations 4X4 CC/PU Auto Ute Call our Customer Services Team Use your Farm Source Rewards to discuss how to get these Live from 1 October 2014 card at any Mobil Service Station great offers. until 30 April 2015 at any to access the discount. Available now, ongoing offer. Holden dealer. Live from 1 November 2014, Get $10 per month off all Spark As a Fonterra farmer you get ongoing offer. broadband/home phone plans Holden’s biggest ever discount Use your Farm Source Rewards and $10 per month off mobile – save 30% when you purchase card at your local Mobil branded plans. or lease a Holden Colorado 4X4 Service Station to save 18 cents off Talk to us today on 0800 731 266. ute. The Holden Colorado ute has per litre on petrol and diesel at unbeaten towing capacity and the pump. Southern Cross 500Nm of torque, which means it Save over 10% and ensure you can make light work of whatever Carter’s Tyre Service and your family’s health is well you throw at it. Save up to 25% on passenger, protected 4WD, light commercial and truck On Farm Fuel and agricultural tyres Call 0800 438 268 and a Fuel delivered to your farm – up Southern Cross Representative to 23 cents per litre cheaper than Use your Farm Source Rewards will discuss your options and the average pump price* card at Carter’s Tyres to access complete the application process the discount. with you. Talk to us today about how our Live from 1 November 2014. exclusive Z national pricing can Available now, ongoing offer on all Valid for 12 months. benefit you, call 0800 731 266 to health insurance policies. arrange an on farm quote to suit Save up to 25% at Carter’s Tyre your needs. Service on passenger, 4WD, light commercial and truck and Available now – ongoing offer. agricultural tyres (over 1,200 tyres Get bulk fuel delivered on your from GT Radials, Pirelli, Alliance, farm cheaper than you can buy Goodyear, Dunlop, Bluestreak, it at the pump! On farm delivery plus other brands). saves you time – cutting down on Just use your Farm Source Rewards trips to the nearest petrol station – card at your local Carter’s Tyre and it also saves you money. Service to take advantage of this *pricing and savings are an great deal. indication and are subject to change.

15 ONLINE, ON YOUR MOBILE AND ON THE GO

We appreciate it’s busy running a farming business, and many decisions are made on the go. So we’re making it easier than ever to access everything you need – on your computer, on your mobile and on your tablet. We’ve completely revamped what’s You can easily access all your Source shortcut directly to your available to you digitally to help farming information, get advice, mobile or tablet, for easy access to drive success in your business. information and support, shop everything you want. Or, continue Our new Farm Source digital for farm supplies, access exclusive to use the Milk Production app for platform brings to life Fonterra’s deals and see your Farm Source a quick snapshot of your milk stats. world of dairy know-how and Rewards grow. Farm Source online gives you puts the Co-op at your fingertips It’s all about harnessing the what you need, when you need it. anywhere, any time, any place. benefits that come with being part And to make sure you get it as And that includes your mobile of Fonterra. fast as possible, we’re teaming phone, your computer and up with Spark for cheaper You can download the Farm your tablet. telecommunications.

16 FARM BUSINESS

Fencepost, meet Farm Source. We’ve given Fencepost a total overhaul and introduced it to Farm Source. All your information is still there to manage your farm business, only now with simpler, more intuitive layouts and navigation. But that’s just the beginning. We’ve also added a Financial Toolbox to help support your business. Here you’ll find information on ways to get more flexible options to manage your cash flow, your shares, your risk and your capital. Check out the Invest As You Earn and Dividend Reinvestment plans – and there’s plenty more. Turn to page 22 for more details on the new financial tools. While we’ve made some changes, some things will stay familiar. You can still log in the same way you usually would, through the new Farm Source site, and you can save it as a favourite link through the new URL nzfarmsource.co.nz/business. And you can still access all your stats on production and quality through the Farm Business homepage, as well as comparison reports, statements and nitrogen reports, the Milk Payment Estimator and Check it out at nzfarmsource.co.nz Fonterra financial information such as Advance Rates. You can also link through to trade your Fonterra shares as well as access other key financial information, such as Global Dairy Updates, presentations and market announcements.

17 FARM BUSINESS

Now you’ll be able to access everything you need to run your business through your mobile phone, as well as your computer and tablet.

18 FARM SOURCE FARM STORE

Through the Farm Source Hub, you can shop online for all of your practical farming needs.

There are more than 8,000 products available online. You can also check to see if your local Farm Source Hub has what you’re after in stock, then click to purchase and either click and collect from your store or have your products delivered direct to your farm. You’ll see regular exclusive deals in stores and online that are just for Fonterra farmers.

19 GET THE FINANCIAL TOOLS YOU NEED TO SMOOTH THE ROAD AHEAD

20 The right financial tools can help you grow at the pace that works for you. Fast or slow, you’ll have our help to get where you want to go.

21 FINANCIAL TOOLBOX

Flexibility The Financial Toolbox is a selection of Certainty tools that can help you better manage Growth the financial side of your business. The toolbox covers options to manage your shares, capital and business. These tools are part of our The Financial Toolbox is designed commitment to working with you. to specifically help you manage We want to ensure you receive your business with Fonterra, in the financial options that enable you way best suited to you – whether to grow your business. by getting more certainty on returns, or by providing a variety Some tools are available now and of ways for you to manage your others will become available later shareholding. in the 2014/15 season.

FINANCIAL TOOLBOX OPTION A Helping you grow your business FINANCIAL TOOLBOX

- Dividend Reinvestment Plan MANAGE YOUR - Share-Up Over Time SHARES - Invest As You Earn

MANAGE YOUR - Equity Partners’ Fund CAPITAL

MANAGE YOUR - Guaranteed Milk Price BUSINESS

22 DIVIDEND REINVESTMENT PLAN

Receive shares Benefits in lieu of a cash • Hands-off easy way to increase your shareholding to help meet dividend your minimum shareholding requirement Open from December 2014 • Reduce the need for lump sum A Dividend Reinvestment Plan borrowing to buy shares (DRP) allows you to receive • Fund growth in your shares in lieu of all or part of shareholding through your cash dividend. your dividend

SHARE-UP OVER TIME

There are three Share-up Options to options available for the 2015/16 Benefits spread your season. Each contains different • Reduce the need for lump sum requirements for sharing up. borrowing or upfront cash share purchase Your options are: investment to buy shares requirements • 3-Year transaction period – Buy • Sharing up over time smooths 1/3 of the required shares each impact on cash flow Open from 29 September 2014 year, over a 3 year period. • Flexible options for a range of • 6-Year contract – Hold 1000 situations – new or growing Share-up Over Time allows you farmers, farm sales and to spread your share purchase shares upfront, no more for the next 3 years, then 1/3 of restructures with change of requirements over a period of ownership three to ten years. Spreading the required shares in years your share purchase over a 4, 5 and 6. period of time can help to • 10-Year contract – Hold 1000 reduce the need for lump sum shares upfront, then 10% of the borrowing to buy shares and required shares each year over a smooth the impact on cash flow. 10 year period.

23 INVEST AS YOU EARN

Invest As You Earn provides a Use a portion of hands-off approach to increasing Benefits your monthly milk your shareholding over time by • An easy, hands-off way to increase allowing you to invest some of your shareholding – the shares payment to invest your milk payment into shares are purchased on your behalf in shares each month. • Regular monthly investments You choose when you want to mean you will receive an average Open from December 2014 invest and you can align your share price over time monthly investment amount with • Align with your farm cash flow by your farm’s cash flow. Shares are selecting an amount that suits you purchased on your behalf and with • Reduce the need for lump sum a regular monthly investment you borrowing to buy shares will receive an average share price • Can be aligned with a Share-up each month. Over Time contract

EQUITY PARTNERS’ FUND

A goal of the Equity Partners’ Fund Flexible equity is to provide a source of equity Benefits funding to support funding for Fonterra farmers, big • Leverage the equity provided to or small, to grow with the Co-op. grow your earning or production your goals The Equity Partners’ Fund is more rapidly intended to complement, rather • Tailor the extent of the equity Under consultation only than replace, other forms of debt you use according to your and equity funding. Fonterra intends to consult business needs on the merits of establishing Later this year Fonterra intends • Reduce your reliance on debt an Equity Partners’ Fund that to release more detail on the • Align your business with would be a source of long- objectives, structure and operation long-term partners with term equity for our farmers in of the Equity Partners’ Fund for shared interests New Zealand and Australia, by consultation. It will take time to sourcing equity from investors. review and refine this detail during The Equity Partners’ Fund the consultation process so that would invest at the farm level to Fonterra can be confident such support you to grow production a fund would serve the interests and manage volatility, while of our farmers and be viable meeting environmental and for investors before proceeding other requirements. further.

24 GUARANTEED MILK PRICE

There are two opportunities to lock Manage volatility in a Guaranteed Milk Price during Benefits in Milk Price and the season: There are a range of key benefits with Guaranteed Milk Price. Some 1. In June for production supplied plan with certainty of these include: from 1 June to 31 May (12-month Open in December 2014 agreement), and • Gives you certainty over a portion of your income and June 2015 2. In December, for production supplied from 1 December to • Allows more robust budgeting Guaranteed Milk Price gives you an 31 May (6-month agreement). and financing, opportunity to lock in the price you receive for a percentage of your milk. Fonterra will continue to be • Gives you confidence around proactive in providing tools to help debt servicing and capital Volatility can create pressure at meet the needs of our farmers in investment on farm. the farm gate due to uncertainty managing price volatility. in the Farmgate Milk Price and can impact your farm business If you would like to participate planning and budgeting. in Guaranteed Milk Price, you Guaranteed Milk Price is a useful can apply online in December or tool to help you manage price you can request an information volatility, giving you certainty booklet, which includes an over a portion of your income. In application form. turn, certainty allows more robust budgeting which can help you to confidently make decisions around servicing debt and capital investment on farm.

For more information If you would like more information on the Financial Toolbox and the tools that can help you better manage the financial side of your business with Fonterra: • Go online to nzfarmsource.co.nz/business • Contact your Area Manager, or • Phone 0800 65 65 68.

25 FONTERRA, FARMERS AND FARM SOURCE... TOGETHER AS ONE

FRONT COVEROUR LINK TO THE DAIRYTEMPLATE WORLD SEPTEMBER CONCEPTS

SOMETHING BIG IN STORE FOR METHVEN ... Find out more inside.

INSIDE: Farm Source info booklet. Find out what Farm Source can do for you.

COMPETITION: Revealed inside the winner of the Mazda BT50 Ute for a season.

FINANCIAL TOOLBOX OPTION A

FINANCIAL TOOLBOX

OUR METHVEN. - Dividend Reinvestment Plan OUR PLACE. MANAGE YOUR OUR OUR - Share-Up Over Time METHVEN. METHVEN. SHARES - Invest As You Earn

MANAGE YOUR - Equity Partners’ Fund CAPITAL

MANAGE YOUR - Guaranteed Milk Price BUSINESS

26 NORTHLAND

BAY OF PLENTY WAIKATO

TARANAKI

CENTRAL DISTRICTS

CANTERBURY

OTAGO

SOUTHLAND

27 THIS MARKS THE START OF A WHOLE NEW ERA FOR THE STRENGTH OF OUR CO-OPERATIVE You know each other by first name. They know your business inside and out. With Farm Source you’ll get closer to your local source of global dairy expertise. nzfarmsource.co.nz