5 May 2017

Fonterra won't say if it will repay milk payout money

2:59 pm on 5 May 2017

Fonterra won't say if it will repay Australian farmers millions of dollars in milk payout money it took back.

The average dairy herd has doubled in size over the last 20 years.

"Fonterra really morally and legally has to return that money," said lawyer David Burstyner. Photo: RNZ / Robin Martin

Australia's biggest dairy company Murray Goulburn is reversing its clawback of the payout, and Fonterra normally follows its rival's lead.

Murray Goulburn this week announced it would close three factories, drop its controversial clawback of farmer payments and borrow money to artificially keep its milk price higher if required.

Fonterra met suppliers in Australia yesterday but would not comment on the outcome.

A Melbourne lawyer, David Burstyner, who is heading a farmers' class action against Fonterra, put the amount it should pay back at $60 million.

He said Murray Goulburn's clawback had already been ruled unlawful, and Fonterra's was no different.

"Fonterra really morally and legally has to return that money. If they don't it just says to suppliers that Fonterra thinks it's above the law."

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

The company then 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.

But the commission has said it will not prosecute Fonterra because it was more transparent about the risk that prices might fall.


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