Wellington, Nov 26 NZPA - Fonterra farmers have dumped one of their incumbent directors seeking re-election, apparently in a protest over the performance of the cooperative's board.

The board has pushed hard for a capital restructuring plan which would open the company to limited outside shareholdings, and some of its directors had a high profile role in delays to disclosure of poisoned milk being sold by a Fonterra joint venture in China.

Incumbent directors Greg Gent and Jim van der Poel were re-elected to the board, and will be joined by one new director, John Monaghan, a former chairman of the farmers' watchdog group, the Fonterra Shareholders' Council. The third incumbent director, dairy industry veteran Earl Rattray, who chairs the Dairy Companies Association of New Zealand, in the Waikato, was dumped.

The vote announced at today's annual meeting of the cooperative followed campaigning by a former Fonterra director, Harry Bayliss, who snubbed Mr Rattray - an ally of board chairman Henry van der Heyden - in a mass email to Fonterra's 10,000 farmers.

Mr Bayliss, of Manaia, in Taranaki, said during the run-up to the election there was considerable opposition to Fonterra's plans to part-list on the stock exchange.

"Unfortunately it would appear that the proposed (capital restructure) scheme is simply `parked' and is still the preferred option," Mr Bayliss said. "I am in no doubt that this priority is being driven by the chairman (Mr van der Heyden)".

He backed Mr Gent and Mr van der Poel as well as Mr Monaghan, without mentioning Mr Rattray, a former economist who has been a dairy company director for 11 years.

Farmers voting in previous elections for Fonterra board directors have dumped at least three incumbents, with at least two of them being targeted specifically in protests over Fonterra's performance.

In 12 of the 14 Shareholders' Council wards , nominees were elected unopposed. Terence Brocx was elected in northern Northland and Grant Boyde in central Taranaki.

About 300 farmers attended the meeting at the Awapuni racecoure in Palmerston North.

Fonterra told the meeting it has commissioned an external legal and risk review of its Chinese joint venture, which sold infant formula poisoned with melamine.

Fonterra chief executive Andrew Ferrier has said he expects the entire Sanlu investment, nearly $200 million, will be written off in losses and compensation, but there were few questions from farmers on the issue.

Mr van der Heyden said management was also reviewing procedures that the dairy giant adopts in joint ventures as a result of the melamine poisonings.

"It it is appropriate we cast a critical eye over the way we decide on investments and manage and monitor those investments," he told farmers.

Fonterra also indicated that it may look at divesting international assets. Mr Ferrier declined to specify which assets might be sold, though Australian reports this week indicated that Fonterra's Peters and Browne ice cream business in Western Australian may be in play.

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