Wellington, Nov 19 NZPA - The Government says it wants Fonterra to have a capital structure which equips it to take advantage of opportunities.

"Fonterra has a big impact on the New Zealand market, so its fortunes play a big part in the fortunes of our country," Prime Minister John Key told farmers in Wellington yesterday as Fonterra shareholders voted in Ashburton.

The shareholders approved two key steps in the Fonterra board's latest effort to re-jig the co-operative's capital structure.

"We want it to have a structure that puts it in as strong a position as possible to maximise its opportunities," Mr Key told the Federated Farmers national council meeting.

Fonterra said in 2007 that its business strategy to aggressively pursue growth opportunities offshore required $3 billion to $5 billion over the following five years.

"I hope the process it is going through will bring about the changes that Fonterra -- and New Zealand -- needs to make the most of our opportunities in dairying," he said.

Similarly, the Government wanted to see meat farmers taking ownership of the problems in their industry.

Fonterra chairman, Sir Henry van der Heyden said yesterday's votes to start changing Fonterra's capital structure will be seen by future generations of farmers as a significant step in the co-operative's evolution.

Votes which were 89 percent in favour of strengthening the share structure, and reducing the share price expressed "great confidence" in the co-operative and its future, said Sir Henry.

A third resolution related to a constitutional change to allow the changes was agreed to by 92.21 percent of the farmers voting at the cooperative's annual meeting in Ashburton.

Voting was weighted according to a farmer's milkflows, with the larger suppliers having a bigger share of the vote.

The decisions will bind Fonterra's 10,700 farmer shareholders, who had previously objected to a proposed "bold and brave" float of the nation's biggest business.

They were worried that allowing outside investment in Fonterra could have eventually led to a loss of farmer control.

The company has since publicly eschewed the concept of selling 20 percent of the shares to institutional investors and members of the public to raise between $2b and $2.5b in new "permanent" capital.

The farmers yesterday voted to:

* Allow farmers to hold shares equivalent to 120 percent of their milk production, a 20 percent increase, with incentives to hold shares even if their production falls (89.61 percent in favour); and,

* Cut the value of the shares because ownership is restricted to co-operative members (89.71 percent).

They are expected to be asked at a later stage to allow trading of shares between farmers, without them first having to be sold back to the co-operative, which would disconnect the co-operative from its redemption risk.

The Fonterra Shareholders' Council welcomed the endorsements, and its chairman, Blue Read, said farmers now had an opportunity provide additional capital to their company.

"This is an investment opportunity available to Fonterra farmers for Fonterra farmers and for our co-operative," he said.