November 5, 2022

 

Fonterra to pay US$16 million to settle class action lawsuit over milk payment cuts

 


Fonterra has agreed to pay AUD 25 million (~US$16 million; AUD 1 = US$0.64) to settle a class action lawsuit filed against the company by Australian dairy farmers over reduced milk payments in 2016, Stuff New Zealand reported.

 

Court approval is required for the settlement, which is offered without any admission of fault, the cooperative stated in a statement to the New Zealand Exchange (NZX). According to the statement, the payment was budgeted for in the financial statements from the previous year and would not materially affect the company's financial status.

 

The dispute dates back to the 2015–16 dairy season, when Fonterra decreased the milk payment it made to Australian farmers, the cooperative's suppliers, toward the conclusion of the season following a decline in milk prices around the world.

 

Fonterra said in May 2016 that it would lower its milk payout for the 2015–16 season from its opening price at the beginning of the season of AUD 5.60 (~US$3.60) per kgMS to AUD 5 (~US$3.22) per kg of milk solids. The corporation cut its payout to AUD 1.91 (~US$1.23) per kgMS for the final two months in order to achieve an average payout price of AUD 5 (~US$3.22) per kgMS for the entire season.

 

The reduced payment followed a decline in worldwide dairy prices as supply rose at a time of lower demand, after the European Union removed dairy quotas and Russia banned imports of European Union dairy products in response to sanctions over Ukraine.

 

-      Stuff New Zealand

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