Former Van Diemen’s Land Co owner sues Chinese purchaser for $2.3 million following milk price drops

The previous owner of the Van Diemen’s Land Company, a dairying giant based in Circular Head, is suing its new Chinese owners for $2.3 million.

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THE new owner of the Van Diemen’s Land Company is being sued for $2.3 million following the fallout of drastic milk farm price drops a few years ago.

The Tasmanian Land Company, which previously owned the Circular Head dairying giant, claims the Van Dairy Group breached their sale agreement by not properly remitting milk income from processor and exporter Fonterra.

The matter is currently on trial in the Supreme Court of Tasmania before Justice Michael Brett.

The company was sold for $280 million back in 2016 when then-treasurer Scott Morrison approved the sale from TLC’s New Zealand owners New Plymouth District Council to Chinese company Van Dairy, previously known as Moon Lake Investments.

But part of the conditions of that sale, according to a statement of claim lodged in the court, included an existing agreement to supply Van Diemen’s Land Company milk exclusively to Fonterra.

As part of that agreement, TLC’s lawyers said Moon Lake agreed to remit any fluctuations in the milk price paid by Fonterra until the sale was finalised.

TLC claims as part of the sale, it paid Moon Lake $2.2 million as a sum for income in advance prior to closing.

But in May 2016, Fonterra made a shock announcement that it would drastically cut milk prices and claw back payments made up to almost a year prior.

In real terms, that meant suppliers were paid only $1.91 per kilogram of milk solids for a period compared to previous payments of $5.60 for the same quantities, as Fonterra attempted to claw back retrospectively for the benchmark price reduction.

Farmers across Tasmania and Victoria said they were left devastated by the economic fallout.

Then in May 2017, Fonterra – following an announcement by fellow milk giant Murray Goulburn – announced it would reverse its price decrease.

TLC, in its statement of claim, said as a result, Fonterra paid Moon Lake $2,301,207.20.

It’s a sum that TLC says should be put back in its coffers rather than Moon Lake – which it claims “failed or refused to pay” – being left “unjustly enriched”.

For its part, Van Dairy Group has denied any wrongdoing or breach of contract.

On Tuesday, TLC lawyer Chris Gunson SC said the ACCC was now making moves to regulate Fonterra and Murray Goulburn’s milk price contracts.

“Self-evidently, this kind of arrangement is fundamentally unfair to farmers,” he said.

The trial continues.

Van Diemen's Land Company owner Lu Xianfeng

Van Diemen's Land Company is the biggest dairy farm in Australia and the biggest supplier to Fonterra.

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