Bonlac Supply Company to assess Fonterra co-op idea

Open-minded: Bonlac Supply Company says it will investigate Fonterra Australia's proposal to turn the company into a co-operative.
Open-minded: Bonlac Supply Company says it will investigate Fonterra Australia's proposal to turn the company into a co-operative.

Fonterra suppliers are to further investigate Fonterra Australia’s proposal to become a cooperative despite lingering distrust about the company’s cut to milk prices last year.

The Bonlac Supply Company (BSC), which represents Fonterra suppliers, decided at its annual general meeting in Warrnambool on Wednesday to develop options for a cooperative to present to suppliers in the first half of next year.

BSC chairman Tony Marwood, of Echuca, said a key part of any proposed co-operative for Fonterra Australia would be that membership would be optional.

“Not everyone wants to be part of a co-op but there are still lots that want to be,” Mr Marwood said.

He said BSC also wanted the investigation into the co-op proposal to be based on Fonterra’s Australian business and not be “a quasi Fonterra New Zealand dropped here.”

Suppliers who wanted to be members of a co-op would need to acquire shares but there were no proposals yet on how farmers would do so, Mr Marwood said.

Other dairy cooperatives have allowed farmers to acquire shares by deducting the share cost from their milk payments but there were no ideas yet on what methods a Fonterra Australia co-op might use, Mr Marwood said.

He said that despite the failure of many large dairy co-ops in Australia such as Murray Goulburn (MG) and Bonlac, the co-op model was “not broken.”

‘It is the way they are run that is broken. It comes down to management,” Mr Marwood said.

Many of the world’s largest dairy processors were co-ops, Mr Marwood said.

“Look at Fonterra in New Zealand, that co-op is thriving,” he said.

Fonterra Australia, owned by Fonterra NZ, has initiated the idea of becoming a co-op, saying the imminent demise of the MG co-op opens the way for it to do so.

Mr Marwood said the number of Fonterra suppliers which BSC represented had increased to about 1400 across Victoria and Tasmania, swelled by farmers who had switched from supplying MG to Fonterra.

But while Fonterra has gained more suppliers, many of those in the south-west still paying a retrospective “claw back” for the price cut that Fonterra imposed in the 2015-2016 season are reluctant to give it further support by investing in a Fonterra Australia co-op.

That was the opinion of a number of Fonterra suppliers which The Standard spoke to who did not wish to be named. 

One who was willing to be named was Con Glennen of Noorat who said he did not trust the company after it followed MG’s lead and cut its milk price in 2015-2016.