Legal action being taken over dairy giant Fonterra’s sudden cut to milk prices

Dairy farmers are fighting back against Fonterra over its shock decision to slash milk prices in 2016.

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TASMANIAN dairy farmers still smarting from Fonterra’s sudden milk price reduction four years ago are expected to register for a class action seeking compensation from the dairy giant.

The class action was issued in the Supreme Court in Victoria on Wednesday.

About 300 Tasmanian dairy farmers supply Fonterra with milk and the company also has processing factories here.

The dairy industry was shocked in May 2016 to learn the company was reducing the milk prices it paid to some farmers by about 70 per cent.

Tasmanian farmers were among those hit hard, including one family from Winnaleah who protested in the Launceston mall saying Fonterra was “milking them dry” and the price but had forced them to lay off workers and dry off cows early.

MORE: Dairy farmers warn of struggle under price cuts

Fonterra’s milk processing factory in Wynyard.

The Australian Competition and Consumer Commission investigated Fonterra’s shock decision and while it said the company’s conduct contributed to a crisis in the Australian dairy industry, it did not take action.

Chairman of the Tasmanian Dairy Council Andrew Lester said he expected some of the 300 local farmers who supply Fonterra with milk would be interested in joining in the legal action in the hope of compensation.

The case involves dairy farmers who supplied milk to Fonterra in 2015-16 and it will be run by law firms Adley Burstyner and Harwood Andrews.

David Burstyner, the lawyer running the case, said the price cut had not been about the dairy company’s survival with the Fonterra Group posting an $834 million net profit after tax for the year ending July 31, 2016.

The Supreme Court Statement of Claim asks the Court to declare that Fonterra engaged in misleading and deceptive conduct and unconscionable conduct, as defined in the Australian Consumer Law, and that it breached its supply contract and its obligation to match the farm gate milk price of Murray Goulburn.

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“Court proceedings are the ultimate test of conduct and precedent setting, and this case may be an important test of unconscionable conduct laws and protections for small business, such as agricultural enterprises, from conduct of global corporations,” Mr Burstyner said.

“Adley Burstyner hopes the case will decisively end such clawbacks.”

Hearings are expected to start in August.

About 300 Tasmanian farmers supply milk to Fonterra.

A Fonterra spokesman said the ACCC had investigated the 2016 milk price reduction thoroughly.

“We’ve done a lot of work with our farmers since 2016 to rebuild trust and transparency.

Fonterra takes its legal and regulatory obligations seriously and is committed to fully complying with them,” the company said.

“We will address these claims comprehensively at the appropriate time.”

More information and the registration of interest form is available here.