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

Winston Peters questions Fonterra divestment plan

Foreign Affairs Minister Winston Peters has joined the debate around the proposed sale of Fonterra’s consumer and related businesses, demanding answers from the co-operative around its milk supply deal with the buyer, Lactalis.

Editorial: A new era for two co-ops

OPINION: Farmer shareholders of two of New Zealand's largest co-operatives have an important decision to make this month and what they decide could change the landscape of the dairy and meat sectors in New Zealand.

Should co-op sell its consumer brands?

OPINION: As CEO of the Dairy Board in the 1980s I was fortunate to work with a team of experienced and capable executives who made most of the brand investments that created the international consumer business Fonterra inherited. Soprole in Chile was the largest, but there were more than 20 countries where consumer marketing companies were established and Anchor and other brands were successfully launched.

Featured

'One more push' to eliminate FE

Beef + Lamb New Zealand (B+LNZ) is calling on farmers from all regions to take part in the final season of the Sheep Poo Study aiming to build a clearer picture of how facial eczema (FE) affects farms across New Zealand.

Winston Peters questions Fonterra divestment plan

Foreign Affairs Minister Winston Peters has joined the debate around the proposed sale of Fonterra’s consumer and related businesses, demanding answers from the co-operative around its milk supply deal with the buyer, Lactalis.

National

Machinery & Products

New McHale terra drive axle option

Well-known for its Fusion baler wrapper combination, Irish manufacturer McHale has launched an interesting option at the recent Irish Ploughing…

Amazone unveils flagship spreader

With the price of fertiliser still significantly higher than 2024, there is an increased onus on ensuring its spread accurately at…

» Latest Print Issues Online

Milking It

Tough times

OPINION: Dairy industry players are also falling by the wayside as the economic downturn bites around the country.

MSA triumph

OPINION: Methane Science Accord, a farmer-led organisation advocating for zero tax on ruminant methane, will be quietly celebrating its first…

» Connect with Dairy News

» eNewsletter

Subscribe to our weekly newsletter