Fonterra contract cancellation angers farmers

TUCKING IN: Calves feeding at a calfeteria, but now some are not part of a live shipment scheme.
TUCKING IN: Calves feeding at a calfeteria, but now some are not part of a live shipment scheme.

Several Taranaki farmers say they feel they have been kicked in the guts by Fonterra and are set to lose thousands of dollars in income after being cut from a scheme to rear heifers for live shipment to China. 

The farmers, who were approached to rear F12 heifers under the Fonterra International Live Stock Venture, say their contracts were cancelled with no real explanation despite assurances they would be part of the venture for at least three years. 

Waverley calf rearer Chris Carrick said he had been approached by Fonterra to raise for the scheme. "I already rear around 335 calves each year so told them I could handle 108," he said. 

Aymie Shield, from Fonterra, Anthony Spence, RD1 operations manager lower North Island, and a Livestock Improvement representative visited Carrick. 

"Both Aymie and Anthony discussed the contracts being offered for three years, if not longer, and said calf numbers would increase annually as long as I met the requirements of the contract."

Carrick raised 70 calves under the contract and was offered the chance to rear more. But as Fonterra was struggling to source the calves, he says he was happy to let other farmers rear them.

"I wasn t concerned because I thought I would be doing more calves next year anyway. They also told me farmers who took up the contract in the first year would be first in line." 

Fonterra sourced and supplied the calves and contracts stated they must be raised to 95kg within 100 days after which they would be shifted to a grazier until export. 

Carrick said the contract was straightforward and had penalty clauses should the farmer fail to meet the requirements. I was paid a lump sum up front and the rest was paid on completion. 

"All the other farmers I know who had contracts, and I, all met or exceeded the targets, so we were all expecting to receive further contracts," he said. 

However, when he asked when he would receive his contract for the coming season, he was told he would be getting a phone call to say he would not be offered one. 

"When I spoke to Fiona Carrick [no relation], director of livestock for Fonterra, to find out why, she implied the calves were not available as they had not been able to source them.

"I made some enquiries of my own and found the calves are there and in fact, there is more this year than previous years, so who knows?

"It is not right. I don't think Fonterra should go around saying one thing and then pull the rug out from under your feet the next.

"They shouldn t get away with it." 

A spokeswoman for Fonterra said all contracts under the venture were for one year only. 

"At the end of each season we look at the system as a whole and see what works and what doesn't. We look for ways we can do things better and streamline the venture accordingly.

"As a result, some farmers we have used in previous years may miss out, but this is not to say they will not be offered contracts in the future."

Carrick said Fonterra offered him a $500 voucher as compensation. 

He described this as ''laughable''. 

"I have done my budgets for the next few years with the income from the extra 150 calves from Fonterra, but these are all to hell now. I was budgeting $15,000-$20,000 annually, which is no longer there. 

"I have been looking at buying another block and the Fonterra contract, which I thought was guaranteed, was going to make it a lot easier." 

He had had a loan approved based on the contract figures, but missed out on the block. 

"Thanks goodness I didn t get it.

"If I had drawn down the loan based on those figures, I would be up the creek now."

Calf supply for his own operation had not been affected as he was still rearing herefords alongside the F12 heifers, but he knows of at least two others who had lost their suppliers.

"I asked the question, and know a couple other farmers did as well, what would happen if we gave up our calf suppliers.

"We were assured it would not be a problem as the contracts would be for at least three years and would be covered."

-NZ Farmer