Executive chairman Barry Irvin told the Dairy Australia Situation and Outlook breakfast last week trust was “built by your actions, it’s not built by rhetoric” and condemned Murray Goulburn for cutting its farmgate price this season.
Mr Irvin said the actions of MG meant the industry had a “long way to go to build trust back”.
“Sadly, for me, I’ve spent my life trying to build trust and I’m actually impacted by this,” he said. “Because the suspicion doesn’t stop at a particular company, the damage to the industry goes across the industry.”
Mr Irvin was part of a panel that included Fonterra Oceania managing director Judith Swales, MG chairman Philip Tracy and Australian Dairy Farmers acting president David Basham.
Mr Irvin told the participants, who included industry service providers, farmers and farmer representatives, the dairy industry needed to address the recent cuts and talk about them publicly to ensure they did not happen again.
“And I kept saying, ‘Believe me, guys, that is the best we can do. We are pushing as hard as we can to deliver you that number.’
“Their response was that MG says they are going to do better. ‘Why can’t you compete with MG? Aren’t you good enough?’”
He said no farmer was expecting a price cut. “Some were in fact expecting a price increase” based on comments made by MG.
“Then, when MG cut — and I want to be fair here — no suppliers were mentioning Fonterra because Fonterra was openly saying the price was too high,” he said.
“But we had another company saying ‘I can do that or better.’ Then, they cut the price.”
Mr Irvin said Bega Cheese would “hold and take the pain” at $5.60kg/MS “to build trust over a long period, by my actions now by my words, not by my rhetoric”.
His scathing assessment of MG also included questioning why MG had retained a profit this year of $39 million to $42 million when they are slugging farmers with up to $200 million worth of debt.
Mr Irvin also blasted MG about how it was almost “impossible” to work out the MG price for May and June as it was “hidden by something called a milk supply support program”.
“It sounds like a collective loan to me,” he said.
“Sure all banks are going to announce housing purchasing support programs soon.
“If you give somebody money and ask for it back with interest, to me that is a loan. And that is what it should be called and the speaking should be plain.”
Mr Tracy defended MG and said its public announcements had been “very clear” with what the risks were and explained how there were factors beyond the control of MG moved against them very quickly.
Referring to global markets and specifically demand for certain products as well as the Australian dollar exchange rate.
“We are very disappointed by our actions and how it turned out but we can only call it as we see it,” Mr Tracy said.
He also hit back at Mr Irvin telling the room MG had been fair in supporting its farmers and most payments from its profit would go to farmers as dividends.
“We must remember that roughly two thirds of that pool is paid out in dividends to shareholders, which are farmers, and one third goes to unit holders, thereabouts,” he said.
“So, of that $40-odd million quote, just under $30 million will flow to farmers. Even if it went to zero, if we varied from the profit sharing mechanism, the impact in cash in extra payments to the farmers would have been something like one third of one cent. If you are going to be practical about it and think about the numbers, that is not significant, one third of one cent is not significant.”
Mr Tracy defended the MG “milk supply support package” and said it was to reduce the impact of the price cut for autumn calvers.