Victorian dairy farmers who want to switch the company they supply, are being threatened with legal action by milk processor Murray Goulburn.
Farmers who signed onto a share deal with the dairy giant are being told that, according to the fine print of their contracts, they must supply Murray Goulburn for a three-year period.
Lionel Harneiss from Katunga described the actions of Murray Goulburn to a Senate dairy inquiry at Shepparton.
“We discussed leaving the company, trying to find a milk processor, one that would pay a higher payment,” he said.
“But the local company field rep told us in no uncertain terms that they’d see us in court if we attempted to leave.”
Mr Harneiss said he bought the shares because he wanted to support the company unaware that the decision locked him in to supply Murray Goulburn.
“They’re a big company with a lot of value behind them, so we thought at $1 per share that’s pretty good, we’ll go for it,” he said.
“We went like little lambs to the slaughter and the rest is history.”
Ben and Renee McInness also want to leave Murray Goulburn but cannot.
“We’ve been approached but another processor and Murray Goulburn won’t let us out of our contract,” said Mrs McInness.
The young couple said the price offered by the new supplier would make a substantial difference to their farm budget during the period of low prices.
“We’ve been offered a milk price of about $4.95 per kilogram of milk solids over the year and to go to the other company would be $6.”
The difference would be large, “Probably $15,000 for the next five months,” said Mr McInness.
Murray Goulburn said in a statement that it expected its suppliers to honour their commitments.
“MG has taken the precaution of reminding a small number of suppliers that they remain under contract, having participated in our Supplier Share Offer in 2015 (to buy shares at a discount to the IPO listing price) or through financial arrangements including our Next Generation program. Where necessary, we have also advised other processors that a proportion of our suppliers are under contract for these reasons.”
Currently no cases have been taken to court.