Dairy farmers have cast serious doubts on the deal offered by Fonterra, saying it has the potential to further divide the industry.
And leading western Victorian producer, Karinjeet Singh-Mahil has said many producers were now likely to join a class action, to recover money they say is owed them by the dairy giant.
United Dairyfarmers of Victoria president Adam Jenkins said it was very disappointing to be back at the same point the industry was a year ago, despite 12 months of advocating for change.
“It’s very disappointing for those who were all loyal suppliers, those who are still under the Bonlac Supply Agreement or who have left – those who have left have no resolution,” Mr Jenkins said.
“The question in theUDV policy council’s mind is that farmers supplied that milk and that’s the group, in our industry, who are being treated inequitably.”
Fonterra released a forecast full year farmgate milk price range of $5.30 to $5.70 a kilogram/milk solids (kg/MS) for the coming season.
The company also offered an additional payment of 40c a kg/MS, payable 2017/2018 Farmers said the decision saw Fonterra trying to “pass off” the 40c bonus, which had numerous conditions attached, as matching Murray Goulburn’s current milk price.
The bonus would be paid monthly, but could be treated as an advance, before July 31, for farmers with Fonterra since April 30, 2016.
It’s believed Fonterra is trying to lock in suppliers, as it needed to milk for its new Stanhope cheese factory.
Mr Jenkins said the 40c should have been paid in the 2015-16 season.
“It’s not actually rewarding people with more money, its just paying them what they were owed in the first place,” he said.
He said the inequality being created was dividing the industry.
“We have created an industry of haves and have nots, by poor management and inequitable decisions.”
Gippsland Fonterra supplier Marian Macdonald said the decision created four different classes of supplier.
“It’s a very clever thing they have done, but a little bit too clever,” Ms Macdonald said.
“It looks to me Fonterra is not keeping its promise to those farmers who remained.”
She said there were now suppliers who had been affected by last year’s farmgate price cut, those who had since left and gone to another processor, forced retirees and newcomers.
“The people who joined Fonterra subsequently are getting money for jam – it’s created fractures amongst farmers that didn’t need to be there.”
Ms Macdonald said Fonterra had undertaken to match, or better, the price offered by Murray Goulburn (MG), through the BSC agreement.
“They haven’t done that – they need to keep that promise and reimburse people who were out of pocket; it’s not that tricky.
“But it’s strategic; it’s about locking in milk supply.”
Crossley dairy farmer Karinjeet Singh-Mahil said there was a very real possibility of a class action, to try and recover money farmers felt they were owed.
“How can they think this is okay?” Ms Singh-Mahil said.
“They need to settle with all farmers, who supplied them up to the end of the season, June 30, whether they are with them, or not, because those farmers did the right thing.
“They need to pay all the money as a lump sum, not drag it out over a season, and not indenture people – because that is what they are doing, indenturing people.
“Farmers are in financial difficulties right now, and they need to pay it all, right now.”
Fonterra should also pay interest on the money they withheld – “people have had to do all sorts of things to survive.”
She said many farmers had to sell part of their herds, to pay bills, which reduced the amount of milk they could produce.
Ms Singh-Mahil said Fonterra had escaped scrutiny by the Australian Competition and Consumer Commission (ACCC), which had taken action against MG.
“Fonterra has a huge machine that puts out spin and they have used that spin to great advantage with the ACCC and got off scott free.”
