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Australian Farmers Consider Legal Action Against Fonterra
September 3, 2016

A class action against Fonterra has not yet attracted enough Australian dairy farmers to go to court, a lawyer involved has said.

David Burstyner said a report on news website edairynews that “hundreds of farmers in Australia have launched an action against New Zealand milk processor Fonterra and Australian milk processor Murray Goulburn over the calculation of milk price cuts this year,” was not correct.

“I don’t have a viable number yet and I don’t know what the break-even is,” Burstyner of Victorian law firm Adley Burstyner said.

The potential case involving Fonterra stems from a claim that the dairy giant clawed back payments made to farmers that had been paid out from July last year until May this year.

In May Fonterra Australia announced it was revising its payments to farmers for the 2015-16 season from $5.75 to $5 per kilogram of milksolids. In order to make an average payout price of $5 for the whole season, it reduced its payout to $1.91 for the last two months.

It then offered farmers the option of taking out a loan at an interest rate of 3.75 per cent, payable from 2018.

Fonterra said in a statement it took its legal and regulatory obligations seriously and was committed to fully complying with them.

“We have been working closely with farmers in Australia to help them with the impact of last season’s revised milk price. Contrary to some reports, Fonterra has not asked farmers to return money already paid to them for that season,” the spokeswoman said.

Burstyner said farmers affected were mainly in Victoria and Tasmania; in the latter, one in every three dairy farmer supplies Fonterra.

At the least what Fonterra had done was immoral, he said, comparing its actions to the largest processor Murray Goulbourn which has given farmers three years to pay back what they owe.

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Fonterra had also not won any friends across the Tasman after chief executive Theo Spierings told New Zealand farmers earlier this year “what we are doing is drive every cent of money which we can out of Australia back to New Zealand shareholders in this extremely low milk price environment.”

Burstyner’s stance is supported by Kiwi farmer Karinjeet Mahil-Singh, who said what Fonterra was doing “might be legal but it’s not ethically right.”

She said 40 per cent of Fonterra’s suppliers took up the loan offer but 100 per cent of the suppliers had to pay the interest on the loans.

“We don’t know what the interest rate is and we don’t know how much those farmers are paying back,” Mahil-Singh said.

New Zealand farmers had never been asked to pay Fonterra back because the co-operative had generally revised its forecasts in time.

“If they had said in November last year we would had to cut herd sizes, then we would have and been better prepared,” she said.

Like many other Fonterra suppliers who would like to shift to another company, she had nowhere to go.

By: Gerard Hutching


Summer 2018