The company began offering three-year loans in April when a sudden milk price cut left farmers hundreds of thousands of dollars worse off.
Some farmers have since switched to other processors, meaning those who are left have to repay more.
In a letter to farmers released on Monday, Murray Goulburn chair Philip Tracy said that while well intentioned, it is now clear the loan package is not producing the results it was meant to.
The letter said that it could prove counter-productive by making farmers less loyal to the company and, accordingly, Murray Goulburn is now reviewing all options to provide a better solution.
Mr Tracy and other Murray Goulburn executives were not available to speak to the ABC, because they were holding scheduled meetings with farmers in north-east Victoria and Gippsland.
The acting president of Australian Dairy Farmers, David Basham, said the company should have reviewed it earlier but it is better late than never.
«I guess the issue is it looks like they’ve lost a bit of supply, therefore those farmers have left, they’re not carrying any of that burden going forward,» he said.
«Whereas the farmers that have remained are now carrying the burden for those farmers that have left as well.
«So it’s about that equity I guess the farmers are concerned by.»
He said he believed Murray Goulburn were trying to be fair.
«As a company, they had no choice. For the sake of the company they had to do something, and this is what they assessed as the best option,» he said.
Murray Goulburn said it will release details on the change in strategy in October.
‘I just do not understand how that can stack up’
Dairy farmer Paul Mundy was scathing about Murray Goulburn’s loans.
«The galling part was the fact that they told us that they’d massively overpaid us, they had to come up with this MSSP (Milk Supply Support Package) and then recoup money over the next three years, and yet they still went on to announce a profit,» he said.
«I just do not understand how that can stack up to the common person.»
The support package was brought in to soften the blow of a sudden and retrospective milk price cut.
Farmers would get some income rather than nothing, and the loan would be repaid in the form of lower milk prices over three years but it has become increasingly clear there is one major problem.
«The board has been at great pains to stress that this is not a debt against each individual farm, so therefore that allows people to choose to go to a different supplier and just cease supply and walk away with no ongoing burden,» Mr Mundy said.
«However, those that are left then have to be able to repay that.»
Murray Goulburn has previously said about 7 per cent of its suppliers have left for other dairy processors.
«Now, in no way am I criticising those who have left whatsoever,» Mr Mundy said.
«I mean who could be blamed for trying to at least find someone who will pay you above the cost of production.»
Source: ABC
Link: http://www.abc.net.au/news/2016-09-05/murray-goulburn-reviews-support-package/7816802
