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Dairy anguish over Murray Goulburn debacle

ANGER is boiling over as Murray Goulburn suppliers face losing hundreds of thousands of dollars after the company dramatically cut its milk price last week.
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The move is expected to cost the average dairy farmer $127,500 over the next three years.
Suppliers are calling for board resignations after the expected $5.60 a kilogram milk solids price for this year was slashed to a “supported” $5.47kg/milk solids.
Dairy farmers are sceptical of ­directors’ claims they only learnt of a budget blowout of $220 million less than a week before last week’s bombshell announcement.
Farmers have started to leave the co-operative in western Victoria, with rival processors flooded with inquiries.
Uncertainty now surrounds the future of the 65-year-old co-­operative, with its Australian Securities Exchange-listed unit price plunging 42 per cent on the back of a profit downgrade.

While most dairy processors confirmed they would keep the base farmgate prices for this season at $5.60/kg, the nation’s second largest processor — Fonterra Australia — was yesterday ­maintaining its weeklong silence on the issue.
MG has slashed the farmgate milk price by 20 per cent for this season, decimating the value of milk for May and June. It blamed a rise in the Australian dollar, lower than expected sales of adult milk powder in China and revaluation of inventory for the budget miscalculation.
MG managing director Gary Helou and chief financial officer Brad Hingle resigned.
Following lofty promises of up to $6.05kg/MS, revised to $5.60kg/MS in February, the price last week was slashed to a “supported” $5.47kg/MS. Without this support, funded by borrowing, the price would be $4.75-$5kg/MS.
The borrowed money will be recouped from suppliers over the next three years. MG told its suppliers last week that could be 20-27c/kg/MS recouped each year.
The move is expected to cost an average 150,000kg-of milk-solids farm — about 300 cows — $127,500 in the next three years.
Mountain View supplier Grant Olsen said he was most disappointed with MG management.
“The commentators have been saying for a while and you only have to look across the ditch at what’s happening there to see that the milk price was not sustainable,” he said.
Laceby supplier Justin Evans questioned his loyalty to the company.
“We would like to stay with MG, but I think everyone has to make an educated business decision these days than be loyal to a company,” he said.
MG chairman Philip Tracy was not willing to resign after a meeting of suppliers at Camperdown on Monday.
“There was a request for me as chair and other board members to step down. Obviously, the board, we have just seen the departure of our MD and CFO unfortunately. Obviously we’ve had to part ways. The board does recognise there needs to be some stability in the board and management to make sure MG does stay on the same track with the strategy we are pursuing,” he said.
When asked if MG had lost milk since last week’s announcement, Mr Tracy replied “not to our knowledge”.
Warrnambool Cheese and Butter declined to comment on rumours it had picked up 200 million litres of milk.
Limited processing capacity or desire for more milk could restrict supply movement in other regions.
Australian Dairy Farmers Corporation chairman Scott Sieben said it had fielded inquiry from the equivalent of 300 million litres of milk.
Burra Foods has capacity for 10-20 million litres of extra milk in Gippsland, according to managing director Grant Crothers. On Monday he was not aware that Burra had picked up any MG suppliers.
MG said if its milk supply drops 10 per cent, an extra 0.013c a kilogram of milk solids may need to be paid back each year by the remaining suppliers. Dairy consultant John Mulvany said the cut had “been an enormous financial and physical blow to suppliers.” Law firm Slater and Gordon said it will investigate a class action against MG on behalf of investors.
Source: WeeklyTimes

Mirá También

Así lo expresó Domingo Possetto, secretario de la seccional Rafaela, quien además, afirmó que a los productores «habitualmente los ignoran los gobiernos». Además, reconoció la labor de los empresarios de las firmas locales y aseguró que están «esperanzados» con la negociación entre SanCor y Adecoagro.

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