French move disappoints

Court action launched by French food giant Danone against Fonterra has worried and disappointed the dairy co-operative’s farmer shareholders.

Federated Farmers Waikato provincial president James Houghton, who is a Fonterra supplier, said the news was ‘‘disappointing and frustrating.

‘‘No doubt Fonterra would defend it vigorously.’’

He said it was difficult to comment on the pending case without being privy to the contractual obligations and policies between the two parties. But he also saw the issue from Danone’s perspective.

‘‘If I was a shareholder of that company, I would be asking questions why some of those losses were not effectively recovered.’’

While he doubted it would impact on Fonterra’s milk price, Mr Houghton believed it could impact on the dividend Fonterra pays to its farmer shareholders as the amount claimed was so large.

‘‘It will have an effect on the earning potential that comes directly out of Fonterra.’’

Fonterra Shareholders Council chairman Ian Brown, a Waikato farmer, said Danone had flagged this course of action prior to Christmas.

‘‘It’s the realities of business and the transactions that go on between businesses. We sell products and people use that to manufacture and sell products of their own. Sometimes these things happen.

‘‘ You always wish this never happened, but things go wrong and you just have to work through it.’’

Federated Farmers dairy section chairman Willy Leferink remained hopeful that the two parties would reach a settlement.