Third court rul­ing against Fon­terra

South Waikato News - - RURAL DELIVERY -

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.

Fair­fax NZ

TOUGH CHEESE: Fon­terra has been given its third knock­back, and or­dered to pay two com­pa­nies $15,000.

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