Documents suggest confusion behind Fonterra complaints

Documents suggest confusion behind Fonterra complaints

Newshub has obtained documents relating to the disputed payment terms between Fonterra and its suppliers.

Suppliers say the dairy giant has extended payment times from 30 days to 90 days. But the co-operative's chief financial officer, Lukas Paravicini, told the Paul Henry programme this morning that's not true.

He says 75 percent of Fonterra's 8200 suppliers are being paid within 30 days, and 10 percent more have been placed on a 60-day payment arrangement.

Documents obtained by Newshub reveal where the confusion lies.

Documents suggest confusion behind Fonterra complaints

Fonterra's payment terms state suppliers will be paid "61 days following the end of the month within which the invoice is dated".

That means if a supplier submitted an invoice on March 1, it would be paid 61 days following the end of March -- May 31, effectively three months later. But an invoice submitted on March 30 would also be paid on May 31, just two months later.

Suppliers have also complained that Fonterra is asking them to cut their prices. Mr Paravicini says 500 suppliers did get letters requesting they identify "efficiencies" with the aim of generating price reductions to Fonterra of more than 10 percent.

Documents suggest confusion behind Fonterra complaints

Massey University professor Dr James Lockhart says rural suppliers to Fonterra are going to bear the brunt of the new payment terms and the move doesn't look good for New Zealand's largest company.

"You've got a lot of confusion and uncertainty that sits in the market in terms of their financial resilience, in terms of their profit and loss -- perhaps even their balance sheet," Dr Lockhart said.

Late today Fonterra also admitted it will give suppliers a chance to be paid earlier -- but there's a catch, with the supplier being paid less for that privilege.