Court rules Fonterra must supply minnows

A MINNOW cheese processor that has seen off dairy giant Fonterra in the Supreme Court says the good news is that a long battle is over – the bad news is that it can’t get any benefit from the court’s decision.

The Supreme Court has unanimously dismissed an appeal from Fonterra against being obliged to supply raw milk to to boutique dairy processors Grate Kiwi Cheese Company and Kaimai Cheese.

It was Fonterra’s third knockback from the courts on the issue. It was ordered to pay the two companies $15,000.

Earlier appeals by Fonterra to the High Court and Court of Appeal had been dismissed.

Grate Kiwi Cheese director Nigel Atherfold said the Supreme Court’s decision was welcome clarification of the law around Fonterra’s obligations to supply raw milk to other processors – even if they do not not actually process the milk themselves but use another party.

‘‘But it doesn’t mean anything now, because there is no excess capacity around.’’ No company had the space to process milk for two small companies, he said.

Fonterra also welcomed the clarification but said the decision underlined its concerns over the ability to create ‘‘virtual processors’’.

General manager group strategy and corporate finance Alex Duncan said the result reinforced the need for the Government to deal with the ‘‘virtual milk processor’’ issue once and for all in its current review of the Dairy Industry Restructuring Act raw milk regulations.

Any amendment to the regulations should require those getting milk to have their own investment in a manufacturing plant to process it, he said.