The turbulent times with milk prices are continuing to have an impact with Crossley dairy farmers Karrinjeet Singh-Mahil and Brian Schuler billing dairy processor Fonterra for $67,000 for supposedly not matching the milk price paid by Murray Goulburn (MG) in the 2015-2016 season
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Ms Singh-Mahil said the couple switched this month from supplying Fonterra to MG because they said Fonterra had not paid what it was supposed to pay under the Bonlac Supply Agreement.
The Bonlac Supply Agreement calls for Fonterra to match the season’s benchmark price for milk, which is usually set by MG.
“Fonterra paid $5.13/kilogram/milk solids but MG paid $5.53/kg/MS,” Ms Singh-Mahil said.
“Fonterra keep saying MG only paid $4.80.
“Fonterra argues the money on top of the $4.80 was a supplier advance.”
However, she argues the advance was a company debt rather than a supplier debt and does not have to be repaid if suppliers leave.
“It was a loan taken out by the company, not the suppliers, so they could maintain the milk price, the same as Fonterra has done for a number of years” she said,
“It is the responsibility of the company, not the supplier.”
A Fonterra spokesperson said it did not comment on the financial particulars of suppliers, either current or former.
However, the spokesperson said Fonterra had at all times complied with its obligations under the Bonlac Milk Supply Agreement to match the benchmark milk price, which was MG’s farmgate milk price.
“MG has clearly stated in its public announcements and 2016 annual report that its final farmgate milk price for the 2016 financial year is $4.80/kg/MS.
“The advance to suppliers under MG’s Milk Supply Support Package does not form part of the benchmark price, and neither does any MG dividend payment.
“Fonterra’s average milk price for the 2016 financial year was ultimately $5.13/kg/MS, which was 33 cents higher than the benchmark price,” the spokesperson said.
In other dairy industry news, Farmer Power president Alex McKenzie, of Cooriemungle near Simpson, has criticised Member for Wannon Dan Tehan for encouraging MG to seek a federal government grant to help meet the cost of its proposed new Koroit plant.
The company has said its decision to build a new plant at Koroit rather than Laverton in Melbourne’s west depended on it receiving government aid.
Mr McKenzie said giving a subsidy to MG would be “foolhardy” because the company was under investigation by Australian Securities and Investment Commission.