A genetics company's refusal to pay compensation to farmers whose calves were born with a genetic mutation could result in a "civil war" between farmers, says Federated Farmers.

Around 900 farmers nationwide had been affected after semen from a bull called Matrix had been used to artificially inseminate their herds.

Of around 6000 calves sired by Matrix, about 1500 heifers had been born carrying a genetic defect causing excessive hairiness and an intolerance to heat. The mutation would affect their ability to produce milk.

Livestock Improvement (LIC), a farmer-owned cooperative based in Hamilton, owned the bull and said it had contacted all farmers who used Matrix semen in their herds.


It had offered them free tissue sampling and DNA testing to identify if calves had the defect but had refused to pay compensation. The replacement cost of each animal would be around $1300.

The defect occurred naturally and spontaneously and was not discovered until after the inseminations were carried out, LIC said on its website.

"Genetic defects are a fact of life - in any animal species (including humans).

"No genetics company in the world has been known to compensate in similar circumstances."

LIC would also be crediting the cost of all semen and inseminations from Matrix, regardless of whether farmers reared affected calves or not.

But Federated Farmers, which met with LIC members yesterday, said it was concerned about a rift opening up between LIC's shareholders.

The majority of LIC's board members were farmers, and some board members themselves had affected animals.

Feds' dairy chairperson Willy Leferink said he was aware of talk a group was being formed to pursue damages.


"For the most part LIC is a progressive cooperative but this risks civil war with shareholders taking on LIC and pitting farmer against farmer," Leferink said.

"That is not what Federated Farmers wants because LIC needs to learn lessons from Matrix."

Leferink said it had urged LIC them to "think carefully" about their position and where the decision not to compensate could lead.

"Our only hope is LIC may reflect on what we said over the next few days. This is not about winners or losers because no one is winning right now."

LIC's offer to reimburse the cost of artificial insemination straws would be seen by affected farmers as "rubbing salt into an open wound", he said.

"The issue here is that Federated Farmers has tried to impress on LIC the importance of not just making a gesture of goodwill, but of goodwill itself.

"I suppose we want them to put themselves into the gumboots of affected shareholder-farmers."

LIC said on its website that it was important to "always do what's right for the wider shareholder base".

"The majority of farmers we have talked with understand that genetic defects of this nature are extremely rare and compensation should not be paid, but support a gesture of goodwill to affected farmers."

LIC had advised farmers to cull affected animals but a number of farmers had chosen to grow their animals out for beef.

The company said its focus had been on ridding the industry of the genetic defect for good.

The defect had now become known as the Halcyon Defect and would be tested for in the future to prevent recurrence.

Matrix had now been culled, LIC said.