Key Points:
- Fonterra has said that it will pay $25 million to farmers to end a long-running legal case.
- Farmers did something after the dairy coop cut milk payments back in 2016.
- 350 farmers will get money from the court case that started in 2020.
Farmers who were hurt by the so-called “dairy crisis,” in which the company cut its milk payments after the fact, will get $25 million to settle a class action lawsuit.
More than 350 farmers joined the class action, which was brought to the Victorian Supreme Court in 2020 by the law firm Adley Burstyner.
Both sides have told the court that they have reached a deal before the case starts.
Fonterra said in a statement this morning that it had settled without admitting fault because “we think it’s best for farmers, the dairy industry, and our business so we can all move forward.”
The agreement and how the settlement money is split are subject to approval by the court.
Lawyers told the court that it was unlikely that farmers would get their compensation payments “before Christmas.” Instead, it was more likely that they would get them early next year.
Clawback led to the creation of a Code of Conduct
The price cuts by the New Zealand cooperative Fonterra and its rival, the now-defunct Murray Goulburn, caused major changes in the structure of Australia’s dairy industry.
The Australian Competition and Consumer Commission now enforces a code of conduct for the dairy industry (ACCC).
The code says that dairy processors can’t take money back from farmers or lower prices during the season below a minimum published price. It also puts limits on contracts and relationships between farmers and processors.
The New Zealand farmer-owned cooperative said that it had spent a lot of time and effort over the past six years “rethinking its relationship with farmers to build trust and make the industry stronger.”
Fonterra said about what the agreement means for its business, “The settlement sum of AU$25 million, including interest and all costs, has already been accounted for in the prior year’s financial statements and will not have a material effect on Fonterra Cooperative Group Limited’s financial position.”
Fonterra fought hard, says the attorney.
David Burstyner, the lawyer in charge of the class action lawsuit, said it was “a tough court process,” but he thought the settlement would be paid out next year after the court checked the details.
He said, “Fonterra fought hard, and we fought hard for farmers.”
“At one point, a team of about 30 lawyers helped us look at 55,000 documents.”
He said that because of the settlement, the case would not drag on for weeks or even years.
“It gives farmers peace of mind, money, the feeling that their worries have been heard, and an end to a very difficult time for many.”
