Tuesday, 08 December 2015 13:55

Fonterra guilty of breaching contracts

Written by 
Former suppliers of NZDL took Fonterra to court over milk supply contracts. Former suppliers of NZDL took Fonterra to court over milk supply contracts.

Fonterra says it is considering its options after losing a High Court case taken by former suppliers of a failed South Island processor.

Fonterra group director governance and legal Mark Cronin says the judgment refers to complex and difficult issues about special contracts with farmers outside the co-op.

"We are now reviewing the reasoning as well as the implications of the decision," he told Dairy News.

Fonterra bought the New Zealand Dairies Ltd Studholme plant from the receivers in 2012.

It offered the former suppliers to the plant 'growth contracts' on inferior terms in order to placate its existing farmer suppliers; the former suppliers took the co-op to court.

In a written decision, Justice Matthew Muir says Fonterra's reasons for doing so stemmed from a "perceived need to assuage internal politics within its supplier base and included also an element of 'messaging' for the benefit of other farmers who might in the future be persuaded to leave Fonterra and support an independent".

Cronin says Fonterra is disappointed with the ruling.

"We're disappointed in the outcome.

"Fonterra's acquisition of the former NZDL plant benefited Fonterra and the supplying farmers who'd been left out-of-pocket by NZ Dairies Ltd, enabling significant retro-payments owed to them to be paid and ensuring ongoing milk collection.

"We'll be considering all our options, including the option of appeal."

More like this

Fonterra posts solid results

Fonterra has delivered a solid half-year result, thanks to higher margins and sales volumes across the co-op's diversified product and category mix.

Featured

Sheep drench resistance costly

Analysis by Dunedin-based Techion New Zealand shows the cost of undetected drench resistance in sheep has exploded to an estimated $98 million a year.

Dairy sheep and goat turmoil

Dairy sheep and goat farmers are being told to reduce milk supply as processors face a slump in global demand for their products.

Hurry up and slow down!

OPINION: We have good friends from way back who had lived in one of our major cities for many years.

National

Govt urged to reduce ETS units

The Climate Change Commission wants the new Government to reduce NZ Emissions Trading Scheme (ETS) auction volumes as son as…

Dairy sheep, goat woes mount

Dairy sheep and goat farmers are being told to reduce milk supply as processors face a slump in global demand…

Machinery & Products

All-terrain fert spreading mode

Effluent specialists the Samson Group have developed a new double unloading system to help optimise uphill and downhill organic fertiliser…

Can-Am showcases range

Based on industry data collected by the Motor Industry Association, Can-Am is the number one side-by-side manufacturer in New Zealand.

» Latest Print Issues Online

Milking It

Papal visit

OPINION: European farmers are going to extreme lengths to have their message heard.

Thai egg tarts

OPINION: The hustle and bustle of one of Bangkok's most popular fast food outlets may feel a world away from…

» Connect with Dairy News

» eNewsletter

Subscribe to our weekly newsletter