ACM takes Fonterra to court over farmer milk contracts

Australian Consolidated Milk has launched Supreme Court action against dairy giant Fonterra for allegedly encouraging farmers to break exclusive supply contracts.

Australian Consolidated Milk has brought legal action against Fonterra, alleging the rival processor encouraged suppliers to break their exclusive supply agreements by offering a higher farmgate price.

ACM management filed injunction proceedings in the Supreme Court of Victoria against Fonterra Australia this month, accusing a Fonterra employee of taking meetings with at least two farmers who were under agreements with the Kyabram-based ACM.

ACM has alleged the Fonterra employee approached a Victorian dairy farmer in March 2024 and encouraged him to break the farm’s agreement with ACM, knowing there was a further 12 months left to run on the contract.

It has been further alleged that the Fonterra employee undertook a comparative analysis of an ACM contract and a contract that Fonterra was prepared to offer, despite confidentiality clauses in the farmer’s ACM contract stipulating the price that ACM was paying for milk from the farmer was to be kept secret.

In a statement, ACM chief executive Jason Limbrick confirmed the legal action, saying “relationships with the farmers who choose to supply us their milk are at the core of our business”.

“Our priority is to maintain and protect those relationships, ensuring security for our farmers,” Mr Limbrick said.

“When Fonterra refused to provide undertakings that might have allayed ACM’s concerns, our only option was to seek that protection through the courts.

“As the matter is currently before the court, ACM will not comment further.”

Fonterra were criticised in June by farmer lobby groups for its initial opening price. Picture: Zoe Phillips

A Fonterra spokeswoman said: “We deny the allegations made by ACM. We’ve always treated our competitors and farmers with respect, and we did not interfere or seek to interfere with any contracts as claimed.

“As such, we don’t believe an application for an injunction was warranted.”

Australian Dairy Farmers president Ben Bennett said while he couldn’t comment of the specifics of the case, there was a broader mood among primary producers for reform to the federal government’s mandatory dairy code of conduct.

“There have been concerns raised by farmers in several states about the way pricing for this season and last season played out,” Mr Bennett said.

“I can’t speak on the specifics but what I can say is that we’ve had the mandatory code for five years now and there’s always room for improvement.”

Under the federal government code, all processors had to publicly list their offers on their respective websites by 2pm on June 1.

Due to June 1 falling on a Sunday this year, the deadline day was rolled forward to June 2 by the Australian Competition and Consumer Commission.