Loss blamed on Fonterra

Fledgling dairy exporter Open Country Cheese says it could have made a profit this year had it not been overcharged for milk by Fonterra.

The Waikato company - which has about 500 shareholders - has reported a net deficit of $447,232 for the year to May 31. That reflects just eight months of production for the company, which began operating last October.

The company claims Fonterra's overcharging cost it more than $700,000. It has lodged a complaint with the Commerce Commission.

Open Country argues that Fonterra unjustly included capital profits (from the sale of its National Foods and Wrightson shares) in its milk price calculations.

Because of Fonterra's dominant market position, the Dairying Restructuring Act provides a formula for calculating the wholesale milk price it can charge competitors. Open Country says milk price should be calculated on Fonterra's operating performance only.

But Fonterra's John Redwood said. "We believe the act is clear, and we are confident that our interpretation is correct."