Third court ruling against Fonterra
THE SUPREME Court has unanimously dismissed an appeal by dairy giant Fonterra against being obliged to supply raw milk to boutique dairy processors Grate Kiwi Cheese Company and Kaimai Cheese.
It is Fonterra’s third knockback from the courts on the issue. The farmer-owned company has been ordered to pay the two companies $15,000.
Earlier appeals by Fonterra to the High Court and Court of Appeal were dismissed.
Fonterra, New Zealand’s biggest company and controller of 90 per cent of the country’s raw milk supply, had argued in all cases that the two small companies were not ‘‘independent processors’’ as defined by the Dairy Industry Restructuring (Raw Milk) Regulations 2011.
Fonterra is obliged to supply up to 600 million litres of milk a year to other processors at a regulated price, providing they are defined as independent processors.
The Supreme Court noted the Commerce Commission, the High Court and the Court of Appeal had each ruled against Fonterra on the basis that Grate Kiwi and Kaimai were independent processors. But Fonterra had challenged that conclusion.
The court said the issue was whether in order to qualify as an independent processor, the party concerned must physically process the raw milk it obtains from Fonterra ‘‘in its own facility’’, as the Commerce Commission has determined, or whether it is sufficient for the party to do its processing by ‘‘toll processing’’.
Toll processing is when the processor does not use its own facilities to process raw milk but makes use of another processor’s spare capacity.
The court said Grate Kiwi and Kaimi made cheese but when they sought to buy milk from Fonterra they proposed it be processed on their behalf by independently owned Open Country Dairy, the second-largest processor in the country.
TOUGH CHEESE: Fonterra has been given its third knockback, and ordered to pay two companies $15,000.