Bonlac Supply Company (BSC) chairman Tony Marwood has defended Fonterra’s decision not to compensate dairy farmers suppliers who paid clawback payments last year but have since switched to other processors.
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Fonterra’s decision has sparked an angry response from former south-west Fonterra supplier Karrinjeet Singh-Mahil, of Crossley, who said all Fonterra suppliers should be repaid all their clawback payments in a lump sum with interest.
Ms Singh-Mahil said Fonterra’s decision to drastically cut its milk price last year and claw back some of the money it had already paid farmers sent some farmers out of business.
She has launched a petition calling on Fonterra to pay back all of the clawback to suppliers who were supplying the company at June 30, last year.
The United Dairyfarmers of Victoria (UDV) has also raised concern about Fonterra’s decision, saying the company had missed an opportunity “to start rebuilding trust in the industry after the milk crisis”.
However Mr Marwood, whose organisation represents Fonterra milk suppliers, said it was too difficult to equitably compensate all Fonterra suppliers who paid the clawback because of the wide variety of ways in which farmers had paid it.
After consulting with BSC, Fonterra this week decided to reimburse farmers the interest they paid on clawback payments.
It also offered an additional 40c a kilogram milk solids (kgms) in the next milk season to current and recommencing suppliers on top of its forecast milk price.
Mr Marwood, a dairy farmer from northern Victoria, said the premium payment of 40c kgms aimed to lure back dairy farmers who left Fonterra after it cut its milk price last year and imposed the clawback of some of the milk payments it had previously paid to its suppliers.
He said all suppliers who left Fonterra were being contacted so they could get a better understanding of “how they could get their money if they come back.”
Mr Marwood said while Fonterra had lost some suppliers since last year’s dairy crisis, it had “gained twice as many” as those who had left.
UDV president Adam Jenkins said Fonterra’s refusal to compensate farmers who switched processors for financial reasons would make the dairy industry more inequitable.
“Farmers who were financially forced to leave their processors should not be forced to continue to bear the cost of processor actions,” he said.
Those farmers should be paid a fair price for the milk they delivered last year no matter who they now supplied, Mr Jenkins said.
