Dairy co-operative Murray Goulburn’s decision to not pursue $183 million in “overpayments” arising from last year’s farmgate milk price crisis could have ramifications for its main competitor Fonterra.
In April last year, MG retrospectively cut its farmgate milk price (the amount it pays suppliers for milk) and left farmers with significant amounts to pay back. Shortly after, Fonterra followed suit and cuts its farmgate price.
As the Australian reports, Fonterra is legally obliged to either match MG’s farmgate price or pay a higher price. As such, the company now must pay farmers about $60m more for the milk it purchased form them during 2015-16.
Fonterra chief executive Rene Dedoncker will hold a meeting with framers in Melbourne today to discuss the situation.
According to the Australian, farmers are likely to take legal action if Fonterra does not pay the full amount owing.