Kiwi Co-operative Dairies is taking breach-of-contract action against a dairy farmer who wants to switch to a newly established Palmerston North rival.
Kiwi chairman Greg Gent said the legal action was a "simple contractual matter."
The unnamed farmer sought to supply the $10 million North Island Dairy Company set up by a
Kairanga dairy farmer, John Hercoe, and Feilding dry stock farmer John de Vries.
Their milk treatment plant is a joint venture with supermarket owner Foodstuffs, which will sell their milk and cream products under the Pam's brand.
The men were hoping to begin operating the plant at the end of this month. However, Mr Hercoe believes Kiwi's action will postpone the start.
The plant attracted attention as it signified the first break from the dominance of Kiwi and fellow major player New Zealand Dairy Group.
Both have swallowed up all but two of the country's small dairy companies in recent years.
Mr Hercoe said Kiwi's action was against his company and the dairy farmers who switched from Kiwi.
But Mr Gent said any action was only against suppliers who broke contracts.
Any supplier who broke the conditions of a contract "would have to deal with the consequences," he said.
Asked if he thought the action was in the spirit of the industry cooperation sought with the proposed merger of the three major players and the promise of deregulation, Mr Gent said suppliers had undertaken to provide milk until the end of the season.
It was "now a matter for the courts."
Supply contracts with Kiwi are valid until May 31.
- NZPA
