19 Jun 2012

NZ Dairy plant suppliers consider Fonterra contract offer

8:00 am on 19 June 2012

Farmers who have been supplying the New Zealand Dairies milk processing plant at Studholme, near Waimate, are considering a contract that will allow them to keep sending their milk there as the new season gets under way.

Fonterra has signed a conditional agreement to buy the Russian-owned factory which went into receivership last month but it will need Commerce Commission clearance.

The commission will also be looking into a deal that Fonterra is offering New Zealand Dairies' suppliers.

Twenty-seven South Canterbury and North Otago farmers have been supplying about 150 million litres of milk a year from 34 farms.

The agreement Fonterra has signed with the receivers would complete the payment still owed for the past season's milk and it's offering a contract to allow the farmers to carry on supplying the factory while the sale process continues.

Suppliers' committee chairman Robert Borse says they have until Friday to make up their minds on the contract.

He says they are also taking advice on Fonterra's chance of getting Commerce Commission approval to buy the plant.

The commission says as well as vetting the purchase it will be investigating whether the operational agreement Fonterra has with the receivers to keep the plant running before it takes ownership, complies with the competition laws.

The receivers accepted Fonterra's offer after calling for bids for the New Zealand Dairies plant.

The Canterbury dairy processor Synlait has confirmed it also put in a bid.