Fonterra forecasts payout will drop by up to 50 cents a kg Photo: RNZ / YouTube
Dairy giant Fonterra has agreed to pay A$25 million (NZ $27m) to settle a class action claim brought by Australian farmers over a cut in milk payouts six years ago.
The co-operative said it had settled without any admission of liability and there would be no impact on its financial position.
"The settlement sum of A$25 million inclusive of interest and all costs, if approved, 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" it said in a brief NZX statement.
The case arose from claims by several farmers in the state of Victoria that Fonterra had breached the terms of its supply contracts and misled suppliers when it moved to cut milk payouts in 2016.
The farmers claimed Fonterra's milk payout was based on meeting or exceeding those of competitor, Murray Goulburn, rather than in line with their supply contracts.
Murray Goulburn cut its forecast price by as much as 15 percent and shortly afterwards Fonterra moved to cut its payout by nearly as much.
The farmers alleged the way Fonterra communicated the price change amounted to misleading and deceptive conduct, and that it had acted unconscionably causing significant financial difficulty and distress.
Fonterra had always denied the allegations, which it said would be vigourously defended, but had been in mediation with the claimants ahead of the scheduled 15 November hearing date.
The claim was financed by a specialist litigation funding company.