[Foreign language] good morning and welcome everybody. It's my privilege to start our meeting today with our Fonterra Co-operative. [Foreign language] Just a few quick housekeeping and health and safety points from me before we get underway. Smoking, this is a smoke-free venue, which includes vaping. If you do need to have a smoke, please go outside, and the venue has asked if we could please be at least 10 meters away from the building. Bathrooms, unfortunately, there's no bathrooms on this floor, so you need to head back out down the stairs or the elevator, and you'll find the male and female bathrooms across the foyer. To the right of the female bathroom is the first aid room, which is where you'll find the defibrillator. Hopefully, we won't need that.
In the case of an emergency, yeah, if the alarm sounds, please make your way to the nearest exit, which the cabin crew will be now pointing out. In all seriousness though, there are some doors with a big red do not exit. Please do not use these doors, and our meeting point is out at Victoria Square. In the case of an emergency, for any of our non-Cantabs in the room, please stop, cover, and hold till the shaking stops, and then the staff, yeah, will clear us out. But without further ado, yeah, it's my pleasure to hand over now to our Chairman who will lead us through this meeting. Good, everybody.
Thanks, Tana. [Foreign language] Good morning, everyone. My name is Peter McBride, Chair of the Board of Fonterra Co-operative Group Limited. I'm pleased to welcome you to the 2025 Annual Meeting of shareholders of Fonterra. Thanks for your attendance here today in Christchurch and online. I now declare the meeting open. The notice of meeting was sent to all shareholders listed on the share register as of 13 November 2025 and will be taken as read. Not less than 50 shareholders, who between them hold not less than 2% of voting rights, have cast postal votes either by mail or electronically, or present in person or online. This means we do have a requisite quorum. The agenda for the meeting was set out in your notice of meeting booklet. Shortly, I'll present the Chairman's review. Our Chief Executive, Miles Hurrell, will then address shareholders.
We'll then open the meeting for questions and answers on the year in review and our presentations. We'll then move to the resolutions. Resolutions one to four are ordinary resolutions, and resolution five is a special resolution. The Co-operative Council report will then be presented by Council Chair John Stevenson before we move to the final ordinary resolution. Resolution six relating to the Council program and budget. We'll collect the voting papers and open the meeting to General Business after that. We expect to finish by 12:30 P.M. or earlier, and I invite those in the room to stay and join us for lunch, please. I'd like to introduce my fellow directors and senior management from my far left, sporting a pot plant, Brent Goldsack, Cathy Quinn, Andy Macfarlane, and our Director of Governance, Risk and Audit, Anya Wicks.
From my far right, we have Directors Bruce Hassall, John Nicholls, and Alison Watters, and our CEO, Miles Hurrell. We have apologies from Holly Kramer and Alistair Field, our Australian-based directors, because we moved this meeting date quite late, so they were unable to be here, sorry. We also have other members of Miles's management team here today: Andrew Murray, our Chief Financial Officer, Anna Palairet, our Chief Operating Officer, Mike Cronin, Managing Director, M&A and Strategic Divestments, and Matt Bolger, Managing Director, Co-operative Affairs. I'd like to acknowledge the Co-operative Council Chair, John Stevenson, and the members of the Co-operative Council that have joined us here today. I'd also like to welcome Mary Jane Daly, the Chair of the Fonterra Shareholders' Fund, and representatives from our auditors. We have also invited members of the media who are in attendance today.
Shortly, I'll ask Miles to take us through a brief summary of our financial performance. Before we hear from him, let me start today by saying a sincere thank you to all of the farmers out there for your engagement and support, not just this past year, but the past three to five years. We know we've asked for a lot of your time as we've reviewed our capital structure and the divestment of some significant assets. Thanks for taking the time to consider the economic rationale behind these divestment decisions we have made together, for attending meetings and for putting forward your individual perspectives. Robust, challenging, constructive feedback has always been part of what makes this co-op special. We get better outcomes as a result of that.
Finally, thank you for trusting the judgment of the people on the stage beside me who are entrusted to guide the co-op's strategic direction on your behalf. 2025 was a milestone year for our co-op. The team was proud to put up another year of consistent, strong financial performance where we met our commitments to farmers and shareholders. Back-to-back years of a combined strong milk price and a respectable dividend is something that often eluded us in the past. Our final farm gate milk price of NZD 10.16 per kgMS exceeded opening expectations, and our top-line earnings performance of NZD 0.71 per share was near the top end of our guidance range. The co-op delivered a return on capital of 10.9%, also largely consistent with last year and in line with the target average range of 10%-12%.
Overall, Fonterra delivered NZD 16.2 billion in total cash returns to shareholders, up more than 30% on last year. I want to extend my thanks to Miles and his leadership team and all our staff globally for their performance over the past 12 months. At the same time, Fonterra has made considerable progress on strategy, announcing significant investments in our food service capacity and new partnerships and our supply chain network, sorry, and new partnerships with two major customers that acknowledge farmers' efforts to reduce on-farm emissions through financial incentives. I'd also like to acknowledge the efforts of our farm source team for winning and retaining milk supply in an incredibly competitive domestic market. Excluding land use change, the co-op experienced a small but symbolic net increase in our market share.
One of the clear strengths of our co-operative is that as farmer owners, we have a direct say in the key decisions that impact the future of Fonterra. It was great to see just over 80% participation in the vote to divest the co-op's global consumer and associated businesses, called Mainland Group, to Lactalis for NZD 4.22 billion. Combined with the 88.47% of the total farmer votes cast in support of the recommendation, this represents a strong mandate from farmers. We're continuing to work away in the background to secure the last regulatory approvals to separate the Mainland Group business from Fonterra. Some of the regulatory approvals required have been obtained, including approval from the Overseas Investment Office in New Zealand, which Lactalis confirmed they received last week. Other regulatory approvals are still pending.
Subject to these steps being achieved, we expect the transaction to complete in the first half of the 2026 calendar year, and we are still targeting a tax-free capital return of NZD 2 per share to shareholders and unit holders once the sale is complete. The process for the capital return is complex, but similar to the way we handled the capital return following the divestment of Soprole in 2023. This process involves a share buyback, cancellation, and subdivision by way of a court-approved scheme of arrangement. It is designed to ensure that no shareholders' compliance with Fonterra's minimum shareholding requirements or their voting entitlement is affected by the capital return. Capital return requires approval of at least 75% of the votes cast on the special resolution at a special meeting, which we are planning for the 19th of February next year.
A record date for the capital return has not yet been set, but it will be close to the time the payment is made. We will share the record date when it is confirmed. The divestment of Mainland Group as our last significant asset sale signals the end of our structural changes to focus and reshape the co-operative towards our comparative advantages. What this means is a more capital-efficient co-op with the ability to invest further in our upstream value-add opportunities and our specialty ingredients and food service businesses. Foundational work is underway. You see that with the manufacturing and supply chain investments that we've announced this year. They have us well positioned to serve the demand, to service the demand that our sales teams are driving in the market.
What you can expect from us in 2026 and the years that follow can be boiled down to two things: a continued focus on getting the basics right. In particular, we will be working harder on tighter cost management, reducing our cost of quality and improving our manufacturing efficiency. And secondly, a renewed focus on sustainable growth and new opportunities in our ingredients and food service businesses. You'll see the co-op continuing to invest further up the value chain. Those investments will be within regional New Zealand predominantly, where our contribution to local communities will remain significant. The co-op's foundation is well set and our risk appetite better aligned to an intergenerational farming business. It's time to put more energy into going after these growth opportunities.
I'll now ask Miles to come up and share his reflections on the year, after which we will take any questions you have regarding our opening comments. And while he's doing that, I'll just take a minute to acknowledge one of Canterbury's brightest young farmers here with us today. At the conclusion of today's meeting, Andy Macfarlane will retire from the Fonterra Board, having served since 2017. Andy has made a huge contribution to our co-op's governance and direction. He has chaired or contributed to just about every Board subcommittee we have and also served as a Fonterra appointed director on the Fonterra Shareholders' Fund, a role he will also retire from next week. Andy is an exceptional governor and a great man who I've had the privilege of working with closely. Thanks, Andy.
We have valued his support and contribution immensely, and I'm pleased to say that Andy won't be totally lost to us. While stepping down as a director, we are delighted that Andy has agreed to continue in his role as an ambassador at the Fonterra Farmer Representative on the Global Dairy Platform. The Board recognized Andy's significant contribution to our co-op last week and presented him with a Wahaika, a traditional Māori short club symbolizing mana and status. Please join me in acknowledging Andy. Over to you, Miles.
Thanks. Thank you, Peter, and thank you for those that have traveled to be with us here in person, and greetings for those that are joining online. Today, I'll cover your co-op's performance for FY25 and then our plans for the years ahead as we implement our strategy.
Looking first at FY25, I'm pleased to say we maintain the momentum in our performance that we've built over the last few years. As Peter has shared, we ended the FY24-25 season with a final farm gate milk price of NZD 10.16 per kilogram. I'll touch on our current season forecast shortly, which I acknowledge is a step back from the NZD 10 opening price we started the season with, and our full-year dividend was NZD 0.57 per share, fully imputed. Looking more closely at the drivers, our operating profit increased 13% to NZD 1.7 billion. Our reported profit after tax was NZD 1.1 billion, equivalent to earnings per share of NZD 0.65. When excluding the costs associated with the consumer divestment, our normalized earnings per share was NZD 0.71. That strong operating profit generated significant cash, allowing us to pay dividends at the upper end of our policy range.
This performance was driven by lifting all parts of our business. Ingredients had improved margins and product mix, and food service saw volume growth in UHT cream, butter, and mozzarella. In FY25, we allocated 76% of all Milk Solids to the ingredients channel. Around 55% of those Milk Solids informed the milk price, which receives an average regulatory return of around 5%. The other 45% of the solids in that channel have been allocated to advanced and specialty ingredient products. These products generated a much higher return on capital of around 19% in FY25. We allocated 16% of your milk to the food service channel, which delivered a return on capital of around 12%. The remaining 8% of your Milk Solids were allocated to consumer, which delivered a 9% return on capital for FY25, and this was above the consumer channel's historical average return.
Ultimately, this is the rationale for divesting the Mainland Group. We can return capital to you and earn a better return on that capital for your milk that you've invested. As you're aware, during FY25, we pursued a dual-track divestment process for Mainland Group. This culminated in a proposal to sell the business to Lactalis for NZD 4.22 billion. Shareholders voted in October to approve the divestment, giving us a strong mandate to progress with our strategy to be a B2B global dairy provider, and I'm excited by the potential this divestment unlocks for our cooperative. We'll still have global reach and scale, operating in more than 100 markets, including North America, Greater China, Europe, and Asia. Ingredients brand NZMP and food service brand Anchor Food Professionals are both world-leading. They're recognized by customers for their New Zealand provenance and as a source of high-quality innovative products.
We maintain a significant presence here in New Zealand with 24 manufacturing sites, a network of farm source retail stores, and, of course, our Fonterra offices. We're positioning the cooperative to deliver further value through our global food service and ingredients business. And to support this, we continue to invest in new manufacturing capacity to meet growing demand for high-value products. During FY25, we started construction on an advanced protein hub at Studholme and a new UHT cream capacity at Edendale. Products from these sites are expected to come online in the 2026 calendar year. Looking ahead, we have plans to invest up to a further NZD 1 billion in new projects to grow value and drive operational efficiencies. We announced in October a NZD 75 million investment in expanding our butter capacity at Clandeboye, and I look forward to sharing the details of these new projects as they are confirmed.
We know we can deliver greater value for our farmers through focused execution of our strategy. Our strategy is designed to drive a performance lift in our ingredients and food service business. In September this year, we shared information on the financial shape of the co-op post-divestment, including targets out to FY28. The strength of our strategy gives us the confidence to target earnings back to FY25 levels by 2028, offsetting the Mainland Group divestment. We're also targeting a return on capital at the upper end of our 10%-12% target, which is above historical levels. Essentially, post-divestment will be a more focused business with a lower cost base, delivering better return to farmer shareholders. Looking at the year ahead, our forecast farmgate milk price for 2025-2026 is a NZD 9-NZD 10 range with a midpoint of NZD 9.15.
While this is a reduction of our earlier forecast midpoint of NZD 10, it remains in the middle of the NZD 8-NZD 11 forecast we opened the season with. As shared, an increase in global milk production has put downward pressure on global prices globally. Here in New Zealand, milk production is up. And at the same time, milk production is up in the US, Latin America, and Europe, meaning global suppliers now outstripping global demand. Despite that, we continue to see good demand for our products from customers who value our unique offering. Our forecast earnings for the FY26 season are NZD 0.45-NZD 0.65 per share for continuing operations. At all times, our priority is to maximize return to farmer shareholders through both the milk price and earnings.
We do this by building strong relationships with customers, utilizing price risk management tools when we face volatility, and optimizing our product mix towards high-value products. We're firmly focused on our strategic delivery in FY26 and meeting the commitments we've made to our farmer shareholders. Thank you.
Thanks, Miles. We'll now take any questions you have on the presentations we've just given. If you have any questions or comments on the resolutions being dealt with later in the meeting or other matters of General Business, I'd ask you to please wait until the appropriate time in the meeting. In the interest of fairness, please keep your comments as brief as possible and do not repeat questions or comments that have already been made.
If you're here in the room, please wait for a microphone to be handed to you by one of the team before you speak and introduce yourself when you're handed the microphone, please. If you've joined online, you can submit a question by clicking the Q&A button in the top menu bar. You must include your name and supply number, please. Co-operative Councillor Geoff Spark from Ward 20, North Canterbury, hi Geoff, will act as timekeeper. In the interest of fairness, I would request that you do not ask more than one question on each subject. As the time for each question approaches two minutes, you will hear a bell. Please then return your microphone to the team. Do we have any questions in the room in relation to our comments? No. Matt, do we have any online? Okay. Okay. Now on to the business of this meeting. Thanks, Miles.
Voting in the various elections and on the Annual Meeting resolutions is one of the fundamental rights we all have as shareholders. The resolutions to be considered have been set out in the notice of meeting. Each resolution will be by way of poll. Postal and electronic voting was approved by the Board for these resolutions, and electionz.com Limited was appointed to receive and count these votes, which will be included in the poll. Each ordinary resolution must be agreed to a majority of 50% of the votes of shareholders entitled to vote and actually voting on that resolution for it to be passed. The special resolution must be agreed to by a majority of 75% of the votes of shareholders entitled to vote and actually voting on that resolution for it to be passed.
Each shareholder with a voting entitlement has received a voting paper with the notice of meeting pack. The resolutions are all set out in the notice of meeting and will be taken as read. Each resolution will be moved and seconded by a director, a member of the Co-operative Council, or a member of the Directors' Remuneration Committee who may speak briefly to that resolution. I'll invite comments and questions on the resolution. I'm aware of time, so I may have to limit comments and questions to six or eight per resolution. Again, as the time for each question approaches two minutes, you will hear a bell from Geoff. I would ask that you then return your microphone to the team.
When you're asked to vote or if you're here in the room, please place a tick in either the for or against box alongside the relevant resolution on your voting paper. If you've joined online, you may vote by clicking on the voting button in the top menu bar. Please complete your voting on all resolutions before you click submit. The scrutineers from electionz.com Limited will treat non-compliant votes as invalid, so please take care to follow the instructions. For those of you here in the room, we'll collect the voting papers following the voting on all of the resolutions, so just hold them till the end. The results will be posted on the Farm Source website, NZX, and our My Co-op app as soon as they're available today. Let's move to the resolutions. Resolution one relates to directors' remuneration.
Our constitution requires that Directors' Remuneration Committee bring recommendations to shareholders on the remuneration of directors and Co-operative Councillors. I'll ask Conall Buchanan, Chair of the Directors' Remuneration Committee, to propose the motion on directors' remuneration and speak.
Peter. In July this year, the committee reviewed remuneration practices in New Zealand and Australia. We considered whether current remuneration levels were appropriate to ensure highly skilled directors were attracted and retained on the Board, noting the substantial director workload. We agreed that small incremental annual increases in fees continued to be our preferred approach, rather than having periods of no increase followed by large uplifts. We discussed the appropriate level of an increase in the current environment and considered that this was approximately 3%. We recommend that shareholders approve an increase of NZD 15,000 per annum for the remuneration of the Chair, taking this remuneration to NZD 513,000 per annum.
An increase of NZD 6,000 per annum to the remuneration of each director, taking this to NZD 208,000 per annum. An increase of NZD 2,000 per annum to the additional amount paid to the chair of the Audit, Finance, and Risk Committee, taking this to NZD 55,000 per annum. An increase of NZD 1,500 per annum to the additional amount paid to each chair of other permanent Board committees, taking this to NZD 40,000 per annum. And we recommend no change to the discretionary pool of NZD 200,000 per annum in aggregate. Since Fonterra's move to the NZX main Board earlier this year, the remuneration of independent directors appointed by the Board also needs to be approved. Resolution one therefore refers to directors more broadly, to include both elected and appointed directors.
Resolution one also ratifies the remuneration of appointed directors between Fonterra's move to the NZX main Board and today, being NZD 202,000 per annum for each appointed director, together with a right to further remuneration for chair positions and participation in the discretionary pool where relevant. Accordingly, I move resolution one.
Thanks, Connor. I understand that Mike Pavletich will second the motion.
Thank you, Peter. I'd like to second the motion and fully support it.
Thank you. Thanks, Mike. I now open the resolution for discussion. Do we have any questions in the room in relation to this? Matt, do we have any online? This is an ordinary resolution that requires 50% support. I'll now put resolution one, which has been moved and seconded. For those of you here in the room, please complete your voting paper by placing a tick in the appropriate box for resolution one.
If you've joined online, please vote by clicking on the voting button in the top menu bar. If you have any difficulties, please raise your hand and someone will assist you, or click on the help button in the online meeting platform. We now move to resolution two. I'll ask Connor to move resolution two and address the meeting on the recommendations for the Co-operative Council's remuneration. Thank you, Peter. So the committee also considered councillor remuneration in July this year. As with director remuneration, we agreed that small incremental annual increases in fees continued to be our preferred approach. We discussed the appropriate level of an increase in the current environment and considered that this was also approximately 3%.
We recommend that shareholders approve an increase of NZD 4,000 per annum to the remuneration of the chair, taking this to NZD 132,000 per annum, and an increase of NZD 1,500 per annum to the remuneration of each councillor, taking this to NZD 42,500 per annum. We recommend that the discretionary pool, which provides additional honoraria for councillors with additional responsibilities, is increased by NZD 25,000 to NZD 125,000 per annum in aggregate to allow for unexpected contingencies. Accordingly, I move resolution two. Thanks, Connor. I'll now call on Mike to second the motion.
Thank you, Peter. I'll second the motion and support it.
Thanks. I'll now open the resolution for discussion. Do we have any questions in the room? No. Matt, any online? No questions online. Okay. This is an ordinary resolution that requires 50% support. I'll now put resolution two, which has been moved and seconded.
Please place a tick in the appropriate box on your voting papers or complete your online voting. Thank you. Again, if you have any difficulties, please raise your hand for assistance or click on the help button online. We now move to resolution three. I'd like to ask John Nicholls to move resolution three and to briefly address the meeting on the recommendations for remuneration of the Directors' Remuneration Committee.
The Board met to consider and recommend to shareholders the form and amount of the remuneration paid to the members of the Directors' Remuneration Committee. An annual increase of approximately 3% was deemed appropriate. The Board recommends that shareholders approve an increase of NZD 100 to the remuneration of the chair to NZD 3,100 per annum, an increase of NZD 50 to the remuneration of each member of the DRC to NZD 1,850 per annum. Accordingly, I move resolution three.
Thanks, John. I'll now call on Alison Watters to second the resolution.
Thanks, Peter. I support the motion and fully support it.
Thanks, Alison. I'll now open the resolution for discussion. Do we have any questions in the room? No. Matt, online? No questions online. This is an ordinary resolution that requires 50% support. I now put resolution three and ask you to complete your voting by placing a tick in the appropriate box on your voting papers or by voting online. Let's now move to resolution four. I'll ask Brent Goldsack to move resolution four, the resolution regarding the appointment of the auditor. However, before this, I'll invite Bruce Hassall to speak to the motion. Bruce is an independent appointed director and does not have a shareholding entitling him to move or vote on the resolution.
However, in his capacity as the Chair of Audit, Finance, and Risk, it is important that he comments on the auditor.
Thanks, Peter. The Companies Act requires Fonterra to appoint an auditor and provides that fees and expenses of an auditor appointed at an Annual Meeting can be fixed in a manner determined at that meeting. KPMG has audited Fonterra's financial statements for the year ended 31 July 2025. The Board recommends that KPMG be appointed as the auditor for the coming year. The Board also recommends that shareholders authorize the Board to fix the auditor's remuneration. As I'm not a shareholder, Brent will move the resolution.
Thanks, Gents. Happy to move.
Thanks. Right. Thanks, Bruce and Brent. You're going to move it? Too good. Thanks, Brent. I'll now call on Cathy Quinn to second the motion.
Thank you, Peter. I second the motion and fully support it.
I now open resolution four for discussion. Do we have any questions in the room relating to the auditors? No. Matt, online? No questions online. Okay. This is also an ordinary resolution that requires 50% support. I'll now put resolution four and ask you to complete your voting. Now we move to resolution five. Resolution five seeks approval of amendments to the constitution relating to Fonterra's move to the NZX main Board. I'd like to call on Cathy Quinn to move resolution five.
Thank you, Peter. Resolution five is a special resolution required by the Companies Act. In early 2025, Fonterra shifted its shares from a private market operated by the NZX to the NZX main Board, resulting in cost savings to Fonterra. As part of this move, Fonterra was granted multiple rulings and waivers from the NZX listing rules to accommodate Fonterra's cooperative structure.
Two of these were transitionary to provide Fonterra with the time to amend its constitution. The proposed amendments to the constitution are intended to aid readability and interpretation of the constitution. If resolution five is passed, the constitution will be amended as set out in the notice of meeting. I now move resolution five.
Thanks, Cathy. I'll now call on Andy Macfarlane to second the motion.
Thanks, Peter. I second the motion. Fully support it.
Thanks, Andy. I'll now open resolution five for discussion. Is there any discussion on this topic? No. Matt? No questions online. Okay. This is a special resolution and requires 75% support. I now put resolution five and ask you to complete your voting. I would now like to invite Co-operative Council Chairman John Stevenson onto the stage to address the meeting.
While John is coming up onto the stage, I'd like to recognize Don Hammond, Gerard Van Beek, Dale Cook, and Geoff Spark, our retiring co-operative councillors. Thanks for the time and energy that you've all put into the role and contribution you've made to our co-operative. John will present the Council Chairs' Report and then propose resolution six, which relates to the approval of the Co-operative Council Program and Budget. Welcome, John. Thank you, Peter, and good morning, everyone. [Foreign language] .
My name is John Stevenson, Co-operative Councillor from the Wairarapa, and Chair of the Fonterra Co-operative Council.
I started today by acknowledging the local mana whenua, but I'd also like to acknowledge the members of our co-operative present, Peter and his Board, and Miles and his management team. Today, I will speak to four matters as required by the constitution. First, I'll speak to Council's activities during the 2025 financial year. And our role is to represent Fonterra farmers. We do this through our key functions of connection, accountability, and guardianship. Connection is about gathering and understanding Fonterra farmer views and expectations, and letting the Board know what these are. We report on what we raise in our quarterly updates. To ensure we accurately represent to the Board the expectations of all co-operative members, Council conducts an annual survey. This year, responses were received from just shy of 1,100 co-op members. These expectations are outlined in a letter of expectations that we send to the Board.
Council then forms a view on the extent to which it considers that members' expectations are being met. Connection is also about fostering member engagement with our cooperative. During the year, council facilitated one Understanding Your Cooperative program. Councillors held meetings in the wards, and councillors jointly co-hosted five regionally based Beyond the Farm Gate events alongside our farm source team. In terms of our guardianship functions, during the year, Fonterra consulted council on proposed changes to the milk price manual, proposed changes to the terms and conditions of supply, and on the migration of the listing of cooperative shares to the NZX Board. Three councillors also joined three directors on a working group that reviewed features of Fonterra's governance and representation framework. These are reported on further in our council annual report.
Council also performed its usual functions in relation to the annual Fonterra Directors' Remuneration Committee and Fonterra Farmer Custodian Trust elections. These included appointing the returning officer and jointly with the Board appointing the independent assessment panel, and then following the elections, meeting with both of those groups. I would now like to speak to how council seeks accountability on behalf of all cooperative members. This is done by seeking Board explanation of and responsibility for the company's strategy and performance. We report our areas of focus and questioning of the Board in our quarterly updates. Council also commissions independent analysis of Fonterra's financial performance. Northington Partners' review of the 2025 performance is available on Fonterra's website and is largely reproduced in our council annual report.
This year, we also commissioned Northington Partners to provide an independent assessment of the merits of the proposed investment of the Mainland Group to Lactalis. We shared that assessment with the notice of special meeting. Moving now to council's view on how well Fonterra has met our members' expectations. Our letter of expectations categorizes members' expectations under five headings. These being culture, performance, capital allocation, pride in our co-op, and an enduring cooperative. In terms of culture, we continue to see evidence of a positive culture within Fonterra that aligns with our purpose. Members report that their interactions with Fonterra generally meet their expectations, and council continues to see examples of good culture in its interactions with our Board. It is council's view that there was genuine consultation with members on the proposal to divest the Mainland Group to Lactalis.
Regarding performance during the 2024-2025 season milk price and the 2025 financial year dividend, we thought they were both very strong outcomes. Eight of the Board's 11 key metrics in its 2025 integrated scorecard were met. The scorecards included in our annual report, and the missed targets were reduction in Scope one and two greenhouse gas emissions, Fonterra's share of New Zealand milk collections, and core operations manufacturing cash costs per kilogram of Milk Solids. Milk supply is of particular interest and focus for council, as is Fonterra's efficiency. We will be closely monitoring the outcomes of the actions and priorities that management are putting in place and look forward to reporting back to you further on this.
Turning to capital allocation, the proposal to divest the Mainland Group reflects Fonterra's acknowledgment that it has for many years struggled to consistently deliver an adequate return on the farmer capital invested in the consumer business. During the year, there were a number of communications to co-op members on capital investments and how they align to strategy. These included the expansion of the Studholme site, a new UHT cream plant at Edendale, a new cool store at Whareroa, and decarbonization projects at Clandeboye. Fonterra also provides updates from time to time on AgriZeroNZ, as well as making investments internally via the Ki Tua Fund. Our investment in these two initiatives as shareholders is significant. However, potential outcomes for shareholders from the AgriZeroNZ and Ki Tua Fund investments are unclear to farmers at this stage.
Council would like to see more quantitative reporting by Fonterra on the outcomes of these investments as they continue. Regarding pride in our co-op, 74% of co-op members who responded to our April survey said they feel proud to be a member of Fonterra, up from 67% in our 2024 survey. This is a strong result. And finally, members expect Fonterra to be an enduring cooperative. Our April survey results showed the highest levels of co-op member confidence in Fonterra and the New Zealand dairy industry since our annual survey started in 2021. This is another strong result for our cooperative. Moving forward to the milk commissioner's report, the milk commissioner's annual report is published each year in our council's annual report, and it is pleasing that no disputes were referred to the milk commissioner during the 2024-2025 season.
Last year, the milk commissioner commented that the dispute resolution can be hard going for farmers at times, and this year, council initiated a review of this process. We are currently working through possible improvements with the Co-operative Relations Committee of the Board and look forward to that progressing. You can read more about what we do on your behalf in our annual report. You should have all received a copy via email last month, and printed copies are available here today just outside the door on the right-hand side. I do encourage you to take one with you and look through it. It is your report written for you. In summary, it has been a really good year for our co-operative. Fonterra has served the interests of its farmer owners and suppliers and their communities well.
Looking forward, both Fonterra and its farmer owners and suppliers will continue to face change and challenges. One of the key strengths of being a member of our cooperative is that we can look to Fonterra to help us adapt to change and to manage risk on our behalf. In line with Fonterra's purpose, we are strongest when we work together. Just before I finish, I think it's really important to also acknowledge the efforts of Andy on our Board, of Don and Dale, Gerard and Geoff, and the council. Their efforts have been significant, and you've left a lasting impression on our cooperative. To finish, I think council really looks forward to continuing to represent your interests, and in the spirit of our purpose. Tātou, tātou.
I would now like to speak to resolution six, which is to approve the Co-operative Council's budget and program for the financial year ending 31 July 2026. This year, council is seeking shareholder approval for a budget of NZD 2.711 million for council operating costs and NZD 788,000 for other costs contributed to or met by council, giving a combined total of NZD 3.499 million. Based on last season's milk volume, this equates to 0.2 of a cent per kilogram of Milk Solids supplied. Council is very respectful of the funding provided by our farmers. Our work program is designed to deliver our responsibilities and meet our farmer expectations. We're very focused on managing our costs whilst being realistic about what is needed to deliver the work program prescribed by the Fonterra Constitution and the financial markets research analysis required by the Dairy Industry Restructuring Act of 2001.
This budget will enable council to deliver the work program outlined in the notice of meeting. Accordingly, I move resolution six.
Thanks, John. I'll now call on Don Hammond to second the motion.
Thank you, Peter. Thank you, John. I second the resolution and very strongly support it.
Do we have any questions in the room in relation to the council budget work plan? Matt, do we have any online? No questions online. Okay, this is also an ordinary resolution and requires 50% support. I'll now put resolution six. Please complete your voting. And thanks, John. Voting is now closed. For those in the room, collection boxes will be passed around for your voting papers. Could you just raise your hand if you've voted in the room so folks can... Votes in the room? Doesn't look like there's any. That'll be easy to count. While we're collecting...
Well, I don't know. Do we need to play the video while we're collecting the votes? I think we'll count it. At this point, we'd like to provide an opportunity for shareholders to question, discuss, or comment on the management of the company or raise any items of General Business. I now open the meeting for the items of General Business. We'll first go to those questions and comments in the room, and then we'll take questions from online. I'll invite Miles to join me, which he has. Do we have any questions in the room, please? Gerard.
Good morning, everybody. Gerard Van Beek from the Bay of Plenty. I'd like to comment briefly on the role of lactose to the industry. I'd like to compliment management in that they took a very unique and first-principles approach to reviewing the value of lactose last year.
I was supportive last year that you've made the change to putting lactose into a milk price parameter, and I'm really pleased to thank you again this year. On December 5th, we saw the first reaction from the industry as to how it's going to be incorporated into BW, and that is, I think, an exciting change for some breeders. Some other breeders won't be so happy. I have two unfortunate requests. One is that Fonterra starts promulgating to the community at large as to the purpose of including lactose into the milk payment model so that everybody understands how significant it really is. And the last one, which is far more challenging, is that the Board considers incorporating lactose into the definition of Milk Solids.
Okay. I don't think we're going to make any comments now, Gerard, but just acknowledging your statement. Thank you.
Is there any other questions or comments? Okay. Is there anything online, Matt? No further questions online. Good. Meeting's a short one. If there are no further matters for discussion, we'll now bring to close General Business of the meeting. Before I close the meeting, I'd like to acknowledge the recent Fonterra director election results. On Tuesday, it was announced that Alison Watters had been re-elected and Michelle Pye had been elected to the Fonterra Board. I'd like to congratulate both candidates and extend a warm welcome to the Board to Michelle and thanks shareholders for exercising their democratic rights during the election process. I'd also like to acknowledge Mike Fleming for making himself available as well. I'd like to thank you all for attending today and to invite those in the room to join us for lunch. We'll share the results of the votes as soon as possible.
That concludes the business of the Annual Meeting of Fonterra. I'll now ask Tana to close the meeting with a karakia. Thanks, Tana.
[Foreign language]
Thanks, Tana, and thanks everyone for your.