MG outlook promising
MURRAY Goulburn’s executive team was in Leongatha last week to visit the factory and meeting with suppliers.
The trip to Leongatha followed on from a Maffra meeting and factory visit, and the annual business leaders meeting held in Traralgon.
General manager shareholder relations Robert Poole said the business leaders meeting was designed to inform them about the co-op.
“We went to the Leongatha factory to update them on strategy, followed by a suppliers meeting at the Leongatha Football Clubrooms,” he said.
“We hold suppliers meetings twice a year, a March round and an August round. The meetings are vital for the suppliers, the staff and the local business leaders.
“They provide an opportunity to see the managing director, the chairman and the executive team.”
Mr Poole said the $19 million UHT plant upgrade at the Leongatha factory is currently underway.
“It is going from a capacity of around 200 million litres to about 270 million litres and the work is due completion at around Christmas time,” he said.
“It will just retain jobs at the site; there are no new positions being made. It really is just maintenance of skilled jobs.”
This season, Murray Goulburn released its opening price early on June 7.
“That is because our farmers said they were doing it tough and expected the price was going to be higher, which it was, and so they wanted us to allow them to budget strongly on that price,” Mr Poole said.
“We opened around three weeks early on June 7 and fortunately in that next three weeks the Australian dollar came down very significantly.
“That was quite advantageous for Murray Goulburn as an exporter, so we took the opportunity before the year had even started to adjust the price up, to reflect that lower dollar.”
Mr Poole said the majority of farmers’ pay was in the base price.
“Then there are a few different incentives. One is seasonal so depending on the time of year milk is worth different amounts of money. That has been around for a long time,” he said.
“Then there is the scale of productivity, so yes larger farms do get paid slightly more than smaller farmers and that reflects the cost of milk pick up and of course quality as well.
“The other incentive we have is growth, but the majority of our pay is the same for everybody. About 85 per cent of our pay is in the base price.”
In what was one of the toughest seasons experienced, last year Gippsland milk production fell by about eight per cent.
“Murray Goulburn Gippsland was down, but not quite by that much. The prices now are just so much better, around 27 per cent higher,” Mr Poole said.
“If we can get a decent season then hopefully it will be a much better year.
“It takes a while for confidence to return, you have to catch up. There are a lot of farmers who have short term loans and they have creditors they need to fix up in the short term.
“Hopefully this year is about consolidating again and making up for lost ground.
“It is hard to look forward, however the lowering dollar is great, the demand for dairy around the world is very strong and export process are very high, so long may it continue.”
Mr Poole said Murray Goulburn would remain a farmer owned co-operative.
“What we have spoken to our farmers about is raising capital, but that is totally different from any sort of questioning of the constitution for the company’s ownership structure,” he said.
“Murray Goulburn will stay farmer owned, which is what suits us and the farmers. The only people who could change that would be the farmers themselves. I think that is the important message to get across.
“Changing of ownership is very heavily protected in Murray Goulburn’s constitution.”
The co-operative’s milk supply grew by about two per cent last year, when Australian production overall fell by three per cent.
“We hope to keep growing. We have two new plants and we want to grow our milk. The key to growing milk is to pay high prices and that is our objective,” Mr Poole said.
“We are focused on paying the highest price to everyone and we have actually shifted our incentive program more towards farmers who want to grow through our next generation package.”
Mr Poole said the dairy industry hasn’t grown much; it hasn’t grown at all for about 10 years, so it was an important time for the dairy industry.
“Gippsland provides about one third of the milk in Victoria. The dairy industry is going to be the primary economic driver in Gippsland for a long time to come,” he said.
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