Lawyers spearheading a class action against Fonterra Australia want more farmers to register, while the dairy giant says it has completely overhauled its relationship with its Aussie farmers.
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The claim alleges that Fonterra Australia breached its contractual obligations with its milk suppliers by implementing a price decrease or a “step down” in May 2016. Managing director Rene Dedoncker says the company denies the allegations.

“The chance of missing out and stopping the case going ahead is incredibly real unless farmers come forward,” Adley Burstyner litigator David Burstyner said .

Adley Burstyner is representing the plaintiffs Geoffrey and Lynden Iddles in the case.

The claim alleges that Fonterra Australia breached its contractual obligations with its milk suppliers by implementing a price decrease or a “step down” in May 2016.

It also alleges Fonterra Australia engaged in misleading conduct in relation to the likelihood of step-downs during the 2016 season, and finally that it acted unconscionably in its dealings with suppliers during that season.

So far, a little over 300 farmers have registered and Burstyner says he’ll start to “feel better if we get around double what we have now”.

If the numbers stay low, the funder – Litigation Lending Services – could decide it is not worth the risk.

According to Burstyner, “they don’t want to do that, they are really supportive”.

“I don’t want to have to come back to farmers in two months’ time and say ‘we had a really good case, we had someone to pay for it, but you didn’t come forward so I can’t go ahead, or you miss out’,” he said.

There is currently no cut-off date, but Burstyner says the court could impose one at a hearing next Friday.

“We are potentially getting the cut-off date very soon,” he said.

“The case is not just about whether the milk price was right for Australian farmers, but it’s about Fonterra’s pricing guidance to farmers in 2015-16, virtually promising one price but paying another and then clawing back payments for milk delivered.

“In short, we believe that Australian farmers can’t second guess what a global dairy conglomerate spends 10 months virtually promising to pay,” he said.

At the time, the Australian Competition and Consumer Commission (ACCC) filed Federal Court proceedings against Australia’s largest milk processor Murray Goulburn Cooperative for breaching the Australian consumer law, but decided not to take any further action against Fonterra Australia.

The investigation was launched when Murray Goulburn abruptly slashed its forecast payout for its farmer shareholders in April 2016, a move that was followed by Fonterra’s Australian unit in early May.

One of the reasons it opted not to take any action against Fonterra was that it was “more transparent about the risks and potential for a reduction in the farmgate milk price from quite early in the season,” ACCC chair Rod Sims said in a statement.

“We think the ACCC got it wrong,” Burstyner said.

For its part, “Fonterra denies the allegations in the class action and is defending the case vigorously,” Fonterra Australia managing director Rene Dedoncker told BusinessDesk in emailed comments.

“Over the past four-and-a-half years, we have completely overhauled the relationship with our farmers, starting with the recently formed Fonterra Australia Suppliers Council,” Dedoncker said.

“We are proud of the good relationship we have today with our farmers and industry.

“This class action relates to the milk price step-down in the 2015-16 season following changes in the global market. The class action is funded by a litigation funding provider whose business is to fund litigation in order to gain a commercial return.”

Dedoncker noted the ACCC decided not to take any action against Fonterra.

On the funding side, Burstyner says “the farmers pay nothing and if the case loses, they still pay nothing”.

The funder pays all the costs of the case, 100% of the barristers’ fees, 100% of the experts and 70% of Burstyner’s fee.

“I’m out of pocket 30% and I only get that back if the case wins. So, I’ve got skin in the game,” he says.

If the case is successful, the funder gets a percentage of the total recovery, which will be set by the court.

He says the normal range here is between 20-30%.

Meanwhile, the next step involves discovery.

According to Burstyner, they will be going back to court next Thursday to try to obligate Fonterra to turn over a series of documents, such as the documents they provided to the ACCC.

Last month, 14 of our dairy farms in Maine, as well as dozens of dairy farms across northern New England, got an unexpected and disappointing notice from Danone of North America saying that they were discontinuing their contracts with our organic dairy farmers in Maine, New Hampshire, Vermont and elsewhere.

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