The Livestock Improvement Corporation (LIC) has agreed to pay dairy farmers the costs of inseminations and semen from the dairy bull Matrix which was found to have a genetic defect.
An estimated 3000 of his female offspring have a naturally-occurring mutation which causes them to be excessively hairy, heat intolerant and poor milk producers.
But Federated Farmers' dairy chair Willy Leferink says LIC's offer is a slap in the face.
"The cost of the semen is minor, compared to the cost of rearing a heifer to the age of two years ... around the $1200 to $1500 mark," he says. "I would feel very sad if we got to legal action."
LIC says there have been only two genetic defects among its 9000 bulls over the past 50 years, and other genetic companies don't pay compensation for naturally-occurring mutations.