A Fonterra shareholder and agribusiness professor believes Fonterra's guilty pleas to charges relating to its botulism botch-up could have implications for its legal fight against Danone.
Danone, a French-owned food multinational, is suing Fonterra for more than $300 million because its subsidiary, Nutricia, had to recall 67,000 cans of Karicare infant formula following Fonterra's botulism false alarm last year.
Waikato University agribusiness professor Jacqueline Rowarth says Fonterra's admission of guilt to the four charges laid by the Ministry for Primary Industries could have costly repercussions for farmers.
She says the ministry needs to show it's doing the right thing and to ensure that all consumers and customers are protected and that if something goes wrong then somebody is at fault.
Professor Rowarth says in this case Fonterra is clearly in breach of food safety processing: even though there was no problem with botulism, there were a lot of small problems along the way.
"So I think that Fonterra is right to say yes we should have done better, we are guilty," she says. "The challenge then becomes, what happens next?"
Professor Rowarth says the question now is whether that puts the company in a worse case with Danone.
She says if Danone is successful it will hit farmers where it hurts the most - Danone started by saying it would cost $326 million and it may yet claim for brand damage cost.
Professor Rowarth says if that's divided by 10,000 or so farmers, it comes out to a significant amount.
Nutricia has issued a statement saying Fonterra's guilty pleas vindicate the legal action taken by Danone.