Farmers united

DESPITE recording a large net loss and an expected reduction in milk supply, South Gippsland Murray Goulburn suppliers remain dedicated to the cooperative.
The company recorded a net loss after tax of $370.8 million for the 2016-17 year, but managed to reduce its debt from $480 million at June 30 last year to $445 million at the end of June this year.
The cooperative now expects total milk intake to be around two billion litres this season, down from the 2.3 billion litres predicted in July.
Fonterra is also expecting to process around two billion litres of milk in the season ending June 2018, up from 1.5 billion litres last season.
A Fonterra spokesperson said the growth had come from both new and existing suppliers.
Murray Goulburn CEO Ari Mervis said MG’s milk intake this season “remains firmly in the hands of its suppliers”.
According to reports, the cooperative has lost more than 400 suppliers since June last year, including 80 to its Leongatha factory, however MG would not confirm this information.
The company confirmed it would maintain a southern region milk price of $5.20 per kilogram of milk solids, but said a final farmgate milk price of more than $5.20kg/MS remained “under review”.
It said the final price was subject to exchange rates and dairy commodity prices, as well as retaining appropriate levels of milk intake.
Buffalo dairy farmer Peter Young said without a cooperative, the dairy industry in Australia could not function.
“It is farmer owned cooperatives that keep the industry strong,” he said.
Despite MG going through “a tight period”, Mr Young has not considered changing companies. His family has been supplying MG since the 1960s and he remains confident in the company.
“Even if MG’s milk intake falls to two billion litres, it is still the same size as Fonterra after all of its gains,” he said.
“I think MG will come back, but I am not fussed on whether or not it is the biggest processor. My hope is that it remains a strong cooperative. If it is not a cooperative, it is not worth having.”
Mr Young said while he would like to earn more money for his milk, he understands MG has to look after its long term future.
“The good thing about all this is that it has helped MG to refocus on its core values as a cooperative and I have confidence in Ari Mervis and (board chairman) John Spark,” he said.
Mr Mervis said numerous small processors were very profitable.
“You can be a small, efficient processor and you can deliver very good farm gate milk prices to your suppliers and you can be large and inefficient,” he said.
Leongatha South MG supplier Gordon Vagg said MG has been in worse situations in the past and was confident the cooperative would “bounce back”.
He said MG was open to more public scrutiny than other milk processors.
“Other companies don’t have to divulge their losses. Everything in the Australian dairy industry is about Murray Goulburn,” he said.
Mr Vagg said he has heard of farmers in other areas of Victoria struggling to get a second milk pick up because factories were full.
He said that wouldn’t happen to an MG supplier.
“Because MG is a cooperative, if you are a member it is compelled to pick up your milk. Other big companies pick the cream of dairy farms. They are not interested in individuals,” he said.
Adviser Grant Samuel warned it was critically important Murray Goulburn delivers the $5.20/kg MS milk price to minimise the risk of any further significant milk loss and the consequences that could follow.
MG also confirmed its adviser Deutsch Bank AG had received a number of unsolicited proposals from third parties, since announcing its strategic review.

Keeping upbeat: Buffalo dairy farmer and Murray Goulburn supplier Peter Young remains confident in the cooperative, despite a poor end of year report.

Short URL: http://thestar.com.au/?p=22414

Posted by on Aug 30 2017. Filed under Rural News. You can follow any responses to this entry through the RSS 2.0. You can leave a response or trackback to this entry

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