Fonterra is expected to announce its response to Murray Goulburn’s (MG) decision to reverse its milk supply support package (MSSP) tomorrow.
The company’s Australian Milk Supply general manager Matt Watt has told suppliers many farmers had been in touch with Fonterra, wanting to know the implications of the MG decision.
“This week we’ve been working through what they mean for our farmers and our business,” Mr Watt said, in an email to suppliers.
“One of the lessons we learned from last year was to take the time to understand all of the implications.”
He confirmed Fonterra was consulting with several board members of its supplier body, the Bonlac Supply Company (BSC).
BSC chairman, Echuca dairy farmer Tony Marwood, said he would be updating the board today, and confirmed BSC should be in a position to tell farmers the outcome of the negotiations “later this week.”
He said a BSC subcommittee was talking with Fonterra.
Under the Bonlac supply agency agreement, Fonterra has a legal obligation, to match or make higher payments than MG.
MG recently moved the average milk price it paid suppliers up to $5.53 a kilogram milk solids (kg/MS), and also scrapped the MSSP.
Crossley supplier Karinjeet Singh-Mahil said this left Fonterra with a potential bill of $62 million for its 1400 Australian dairy farmers.
Ms Singh-Mahil reiterated her call for Fonterra to give its suppliers “the correct payment for the season.
“Given the announcement, the MG MSSP reversal has confirmed that the final MG milk price for season 2016 was $5.56 average (plus $0.07 dividend).
“Fonterra’s actions have cost us much more than the difference in milk price,” Ms Singh-Mahil said.
“Those people have lost so much more than just that money, many Fonterra farmers have gone out of business, or walked away from dairying; there are marriages which have broken up, families’ lives that have forever been altered.
“How can anyone make up for those things?”
She said farmers would analyse Fonterra’s response, before deciding on what further action to take.
“If they do the right thing, all well and good – if they don’t, we will definitely take some sort of action.”
