The long-running dispute over payment of Victorian Farmers Federation levies to Australian Dairy Farmers is headed to court.
ADF president Ben Bennett said extensive talks between the two groups had failed to resolve the dispute over the non-payment of $500,000 in member fees by the VFF.
"ADF has been very patient over the past 12 months," Mr Bennett said.
"ADF has endeavoured to pursue a resolution via mediation and negotiation, yet the parties are too far apart.
"It has become apparent that the only way to resolve this matter will likely be via court action."
The VFF board said last year dairy farmers were not getting value for money from the ADF, stating it was the most expensive agricultural advocacy organisation for the VFF to belong to, at $344,000 a year.
Last year, the VFF removed all of its nominees to the ADF's national council.
Mr Bennett said the ADF board considered it had a fiduciary duty to the organisation, to other state members and dairy farmers to pursue the outstanding debt that had been "unreasonably withheld".
Mr Bennett said farmers should be aware the levies had been collected by the VFF, on the grounds they would be remitted to the ADF.
"(The levies) have been unjustifiably withheld by VFF," he said.
"Not only has VFF withheld these funds, but the dairy farmer members of VFF, the United Dairy Farmers of Victoria themselves, have continually requested that VFF remit these funds to ADF.
"It is unfortunate to find ourselves in this position and while ADF remains open to finding an amicable resolution, ultimately we must resolve the matter once and for all and move on for the good of dairy farmers and the industry."
A VFF spokesman said the ADF was notified, in October 2022, it would no longer be paid fees, under the current membership structure.
"After over 12 months of requests for negotiation by the VFF, the ADF made a membership fee offer to the VFF at 3:31pm on Friday, February 9, 2024, that expired at midday on February 12, 2024, despite knowing the VFF Board will meet on Wednesday 14 February 2024," the spokesman said.
"The VFF will not comment on any prospective or threatened legal proceedings, but continues to consider the needs of all dairy farmers.
"The VFF is disappointed that the ADF is not negotiating in good faith."
The spokesman said the VFF continued to urge the ADF to implement a fair and sustainable membership funding model.
United Dairyfarmers of Victoria president Bernie Free said it was about time the matter was brought to a head.
He said there had been two ADF presidents and several new directors, since the matter arose.
The argument that the VFF was not getting value for money "doesn't wash with me and it doesn't seem to wash with the grassroots dairy farmers I have talked to," he said.
"Why isn't the VFF questioning, and questioning very hard, the money paid to the National Farmers Federation?"