But Fonterra suppliers and industry figures now argue Bonlac Supply Company has lost its relevance and its slogan should be “Farmers Representing Fonterra”.
A number of dairy farmers are now questioning BSC’s purpose and whether it should be wound up.
Current and past dairy Fonterra suppliers claim the BSC has become a “cheer squad” for Fonterra.
Some said BSC’s Supplier Forum was set up so Fonterra could use it to claim it was consulting with its suppliers.
But as Tasmanian forum member Leigh Schuuring said, when the controversial North Fresh contracts were developed last year, Fonterra told the group not to talk to suppliers about the arrangements.
Poowong dairy farmer Jim Forbes, who unsuccessfully ran for the BSC board in 2016, said the BSC’s Supplier Forum was “where they indoctrinate you into the Fonterra way of thinking”.
Fonterra critics — most of whom wanted to remain anonymous for fear of retribution — point to May 2016 as the turning point against the milk processor and the BSC.
When Fonterra followed Murray Goulburn in slashing its farmgate milk price, suppliers looked to BSC to go into bat for them.
But the milk supply company did the opposite, siding with Fonterra.
As one supplier said: “The independence of BSC went out the window there and then.”
Sources said it prompted two board members — Simon Finger and Tania Luckin — to quit soon after.
Another allegedly resigned from the board a year later as a result of Fonterra offering just 40c a kilogram of milk solids to compensate for its clawback in milk payments, when farmers expected more.
Sources told The Weekly Times the farmgate milk price drop in 2016, the low 40c a kg MS compensation package and the secret North Fresh milk contracts paid to northern Victoria Fonterra suppliers found BSC falling short of suppliers’ expectations.
BSC chairman John Dalton would not comment on the introduction of the clawback as he was not on the board back at the time but he said directors “always have the farmers’ best interests at the forefront of their minds”.
A Fonterra spokeswoman also said the BSC board represented farmer’s interests and acted independently of the milk processor.
One former BSC board member told The Weekly Times, only the independent directors — former Patties Foods managing director Greg Bourke and Wimmera grain grower Leo Delahunty — remain from May, 2016.
A few left in disgust at Fonterra, one quit dairy farming and others left to supply other dairy processors.
Only two Bonlac Supplier Forum members remain from May, 2016 — Western District dairy farmer and Supplier Forum chairman Dave Conheady and northern Victoria regional leader Simone Ross.
But Ms Ross is on personal leave and Mr Conheady is expected to quit by June.
That meant there would be no dairy farmers on either the BSC board or the Supplier Forum group left from the time of the clawback’s introduction.
One Supplier Forum member alleged there was a culture of heavy handedness within the leadership of BSC.
The source said BSC’s leadership did not tolerate criticism or independent questioning of Fonterra from within the board or by Forum members.
As reported in The Weekly Times two weeks ago, northern Victoria dairy farmer Simone Ross was told by Mr Dalton to take personal leave for at least two months, after she questioned the secrecy of the North Fresh milk contracts.
Tasmanian forum member Leigh Schuuring, who quit the supplier group after the handling of Ms Ross’ treatment, told The Weekly Times BSC did not like the questions she asked about the Fonterra contracts.
Ms Ross is believed to be seeking legal advice over her treatment.
Mr Billing said he was asked by Mr Dalton to resign in May, 2017, after publicly questioning the actions of Fonterra in offering a low milk payment.
Mr Dalton would not comment on either case but said he didn’t believe there was any heavy handedness by the BSC.
“As far as people being able to speak their mind, I believe that they can and I believe that they do,” he said.
At a time when Fonterra is negotiating an extension of the service agreement with BSC, some dairy farmers are calling for its axing.
A well connected supplier said it was time to abolish the company.
“It is costing too much money,” he said.
“And I don’t think suppliers get any value.”
Mr Dalton said there was a need for the BSC to remain in place.
“We are there to represent farmers’ needs directly to Fonterra’s senior management,” he said.
The Fonterra spokeswoman said: “It’s important that our farmer have a strong representative body and farmers need to own and be aligned with what that looks like.”
Mr Dalton said a new service agreement was being negotiated with Fonterra which would set out BSC’s structure and how it would function.
He said farmers should see the new agreement by the end of the financial year.