The Supreme Court has ordered parties in a case seeking financial compensation for farmers against dairy giant Fonterra's controversial cash clawback attend mediation this week.
A class action was filed in 2020 seeking orders Fonterra's decision to retrospectively cut its milk price to farmers in 2016 and payback a sizeable portion of their income was misleading and deceptive conduct as well as unconscionable conduct.
Mediation is set for Thursday but if that fails a one month-long trial has been pencilled in next month.
Law firm Adley Burstyner, which acts for farmers, previously said on its website the action sought financial compensation for dairy farmers who supplied New Zealand dairy giant Fonterra in May and June 2016.
Fonterra has filed detailed witness statements.
- Adley Burstyner
"As well as producing 55,000 documents as ordered by the court, including New Zealand board minutes and internal pricing communications, Fonterra has filed detailed witness statements," the law firm said on its website.
"The plaintiffs have filed their witness statements, and five expert reports - from a world-class milk price expert, a forensic accountant, an expert industry consultant and an industry expert and leader and a psychologist."
READ MORE: Anger at Fonterra supplier meetings
In June this year The Standard reported farmers feared Fonterra was attempting to weaken compensation claims to Australian suppliers affected by the milk processor's 2016 price clawback, with a new defence.
In a hearing on June 15, Fonterra sought an order allowing it to change its defence to include a 40 cent payment made to farmers in 2017-18, claiming it should be treated as part of the controversial 2016 farmgate price clawback.
The class action alleges Fonterra breached its contractual obligations with a retrospective step down in May 2016 by slashing the milk payments expected.
Farmers were forced to pay back a sizeable portion of their income, in a year the NZ giant went on to post an $834 million profit.
The clawback caused a severe cash-flow crisis and triggered a class action that is supported by 300 farmers who allege Fonterra engaged in misleading and deceptive conduct, acted unconscionably and breached contracts it had with dairy farmers.
Former suppliers called the defence "absolute rubbish" and an attempt to reduce the financial compensation claim for retrospective lost income, which is expected to be "hundreds of millions of dollars" according to Mr Burstyner.
He said the 40c payment was not paid to all farmers who suffered the step down as Fonterra refused to give it to suppliers who had switched to other processors.
"It seemed very spiteful conduct," Mr Burstyner said.
At the time, Fonterra Australia farm source director Matthew Watt "this payment relates to the 17-18 season, not the 15-16 season".
Mr Watt wrote on dairy insider blog, Milk Maid Marian, "although not legally obliged, we are making the additional 40c payment to our suppliers as it's the right thing to do".
"All Fonterra farmers affected by the 2015-16 price drop are being offered the opportunity to receive this additional payment, including existing, retired and returning farmers," he wrote.
"We're in the process of contacting all the farmers that have left us."
The payment coincided with a move by besieged Murray Goulburn to write off almost $150 million in debts owed by farmers after the Australian Competition and Consumer Commission launched legal action against the cooperative over the 2015-16 milk price fiasco.
Twelve months ago Fonterra managing director René Dedoncker said the future of dairy in the south-west was safe, adding the Cobden factory was here to stay "for the long run".
The comments came about three years after Fonterra closed its Dennington site, forcing 100 workers out of a job.
Last month Fonterra announced it was abandoning plans to sell its Australian operations.
Fonterra was contacted for comment.
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