Australia sours on Fonterra

  • 19/05/2016

Dairy giant Fonterra is under fire in Australia for lowering its payments to dairy farmers there.

Fonterra has 10 plants across the Tasman and last week, following the move by competitor Murray Goulburn, slashed its milk solids payments from AU$5.60 (NZ$6) a kilogram of milk solids to between AU$4.75/kgMS and AU$5/kgMS, because of the slump in global prices.

Australia's competition watchdog is examining the timing and notice of the cuts.

Fonterra's farmers here are expecting a lower payout this season - with the forecast farmgate milk price at NZ$3.90/kgMS - but there hasn't been the public venting like that seen in Australia.

Last week one farmer spilled 2500 litres of milk in protest, according to a video posted to Facebook.

Victorian teen Chloe Scott, 16, has also launched an online petition taking aim at the "greedy" milk companies she says are destroying farming families.

She and her mother have moved off the family's Boorcan dairy farm, which supplies Fonterra, to find work in Ballarat, leaving her father to work the property alone.

Her petition calls on the federal government to review the milk-pricing system.

"I mean, you're losing money every time you go milking," the teenager told NZ Newswire on Wednesday.

Chloe's online petition had garnered 118,000 signatures by Thursday morning.

Following widespread backlash, Fonterra announced last week it would pay more for milk supplied in May and June as well as an additional offset in July and August.

Supermarket chain Coles has promised to boost the price by 20 cents per litre.

Gippsland farmer and Fonterra milk supplier Ron Paynter says it is one of the worst times he has seen in his 20 years in the industry.

Dry conditions had made it more difficult for farmers, who had made many financial decisions based on the elevated milk price.

"It's the $300,000 conversation with the bank manager today to maintain and support our operation and we'll talk to Fonterra about their loans too," Mr Paynter told NZ Newswire this week.