Dairy giant Fonterra has announced it will settle its long-running legal case with farmers after cutting their prices in 2016.
The company will pay $25 million to settle the class action taken by farmers affected by the so-called dairy crisis, where the company retrospectively cut its milk payments known as a clawback.
More than 350 farmers had signed up to the class action through law firm Adley Burstyner which filed the case in the Victorian Supreme Court in 2020.
With the case due to begin, both sides have announced to the court they have reached a settlement.
In a statement this morning, Fonterra said it had settled without admitting liability "as we believe it is in the best interests of farmers, the dairy industry and our business so we can all move forward."
The agreement and distribution of the settlement funds are subject to court approval.
Lawyers told the court that farmers were unlikely to get their compensation payments 'before Christmas' and would more likely be early next year.
Clawback led to Code of Conduct
The price clawback by New Zealand cooperative Fonterra and its now-defunct rival Murray Goulburn led to major structural change in the dairy industry in Australia
A dairy code of conduct has been developed and is now enforced by the Australian Competition and Consumer Commission (ACCC).
The code forbids clawback or price cuts mid-season by dairy processors below a minimum published price and places restrictions on contracts and relationships between farmers and processors.
The New Zealand farmer-owned cooperative said it had spent the last six years investing significant time and effort "to overhaul its relationship with farmers to build trust and strengthen the industry.
On what the agreement means for its operations, Fonterra said, "the settlement sum of AU$25 million, inclusive of interest and all costs, has already been provided for in the prior year's financial statements and will not have a material impact on Fonterra Cooperative Group Limited's financial position."
Fonterra fought hard, lawyer says
Lead class action lawyer David Burstyner said it was an "an intense court process" but he expected the settlement payout next year once the court had checked the details.
"Fonterra fought hard and we fought hard for farmers," he said.
"We looked at 55,000 documents, using a team of around 30 legal staff at one point."
He said the settlement meant the case would not drag on for weeks and possibly years.
"It gives farmers certainty, money, satisfaction that their concerns have been vindicated and closure on a period that was very distressing for many."
