Independent cheese maker Open Country Cheese has won an interim injunction against Fonterra ordering the dairy giant to keep supplying it with milk at the regulated price.
Open Country Cheese says Fonterra had refused to supply it with milk at the regulated or default price in March becausethe cheese maker was late getting in its forecasts for that month. Interim chairman Wyatt Creech said the error was purely a technical one, and Open Country Cheese's pattern of regular buying showed it intended to continue buying from Fonterra.
This week the High Court ordered Fonterra to keep supplying the default milk in the interim, until the issues at the heart of the dispute could be resolved.
The Dairy Industry Restructuring (Raw Milk) Regulations say that Fonterra has to supply up to 500 million litres to independent processors at the regulated price this season.
Fonterra is due to supply Open Country Cheese with seven million litres of default milk in March, accounting for half of the cheese maker's monthly production.
Creech said the row was the latest episode in a long-running battle between Open Country Cheese and Fonterra. This month the Waikato-based independent and South Island operator Dairy Trust complained to the Commerce Commission that Fonterra was using its near-monopoly position to frustrate their efforts to get milk from farmers.
The companies said Fonterra was indulging in predatory buying by paying farmers more for their milk in areas where it had competition.
A previous complaint to the commission by Open Country over freight charging by Fonterra was upheld.
"I think they were doing anything they can to frustrate competition," Creech said. "This business with Fonterra just goes on and on and on."
Fonterra would only say yesterday that it would comply with the interim injunction.
Competition for milk supply in parts of the Waikato, Canterbury and Southland has led to aggressive marketing campaigns.
"Fonterra cannot stand back and allow commercially valuable suppliers to be cherrypicked by competitors - this will cost all Fonterra suppliers in payout," Fonterra general manager of sustainable milk growth Mark Leslie told NZ Dairy Exporter magazine this month.
Open Country wants to find another 100 farmers to supply it.
