11 May 2017

Fonterra to progress with milk price clawback

8:05 am on 11 May 2017

Fonterra Australia won't follow Murray Goulburn's decision to axe its controversial repayment program.

Cows in dairy shed

Photo: RNZ/Carol Stiles

Last week Australia's biggest dairy company, Murray Goulburn, decided to reverse its clawback of a payout, and Fonterra usually follows its rivals lead.]

The Australian Competition and Consumer Commission is prosecuting Murray Goulburn and two of its former top executives, accusing them of misleading farmers last year by overstating the milk price.

The company slashed farm gate prices, and forced farmers to pay back money they had already received.

The decision left many farmers individually owing Murray Goulburn more than $100,000 and sparked a crisis in the sector. Murray Goulburn is now closing three dairy factories to cover that cost.

Fonterra has announced it will pay its Australian dairy farmers an additional 40 cents per litre of milk solids for the coming year.

Fonterra managing director Rene Dedoncker said the package focused on Fonterra's loyal suppliers and was not an obligation, but the right thing to do.

Victoria dairy farmer Karrinjeet Singh-Mahil moved from Fonterra to Murray Goulburn late last year and said she was furious about Fonterra's announcement.

Ms Singh-Mahil told the ABC that her farm will be ripped off for the season which they should be paid for and she will join in legal action against Fonterra that is currently underway.

The company also announced a forecast farmgate price for the 2017/18 season of $5.30 to $5.70 per kilogram of milk solids.

- RNZ / ABC

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