The move to pay New Zealand suppliers of goods and services in 90 days, instead of 30, is in line with its global standards, says Fonterra.

The Green Party is calling on Government Ministers to step up and defend small regional businesses, in light of accusations some are being bullied by Fonterra.

Fonterra has reportedly forced 10-20 per cent cuts in supplier and contractor rates and lengthened the time it takes to pay them to 90 days, says Green Party small business spokesperson David Clendon.

'The Minister for Small Business, Craig Foss, should be standing up for small businesses and demanding Fonterra pay its bills within the normal timeframe – 30 days – not waiting three months to pay up.

'It looks like Fonterra is using its size to bully its suppliers and contractors, who are the small businesses that keep our regions ticking. Small businesses are not banks, and should not be expected to provide Fonterra with a free 90-day overdraft.”

Fonterra's chief financial officer, Lukas Paravicini says 'we have an ongoing responsibility to our farmers to ensure we are operating as efficiently as possible. As part of this, we are working to move all of our largest suppliers of goods and services to payment terms that match our global standard, which already exists.

'We are very conscious of the role we play in New Zealand communities beyond our farmers and this alignment of supplier payments affects around 20 per cent of the 18,000-20,000 suppliers we have globally.

'This work has been underway for six months and is part of our wider business transformation, which we announced nearly a year ago. It is about being efficient as possible and driving as much cash back to our farmers as possible.”

Lukas says Fonterra is a strong business.

'Our business performance is strong as we outlined at our update in November. We will provide a further update on March 23 at our interim result.

'As we said in November, we are on track to reduce gearing to between 40-45 per cent.”

Yesterday's milk price announcement illustrates the challenges facing New Zealand's dairy sector and the pressure continuing low global dairy prices are having on farmers' businesses, he says.

However, David Clendon says 'the National Government needs to look closely at how solvent Fonterra is and whether its financial position means we're actually looking at the symptoms of a much more serious economic risk.

'This kind of bullying behaviour from Fonterra suggests it could be panicking because of serious financial trouble, and leaning on regional small businesses to help hide what a bad shape its books are in.

'National needs to back up the small and medium-sized businesses that are the lifeblood of our regional economies.”