MG says sorry to suppliers

DAIRY giant Murray Goulburn has apologised to suppliers over large cuts to the co-operative’s profits and the lower price it will pay farmers for their milk.

Around 2500 dairy farmers in south-east Australia are facing a reduced income after budgeting on a higher price for their milk.

The apologies came in a series of supplier briefings held by MG management across Victoria last week, including at Leongatha last Wednesday. There will be more meetings in Tasmania this week and SA and NSW in weeks to come.

The suppliers were given a business outlook and trading update. Also under discussion was the revised forecast, the recent management changes and details on the milk supply support package.

On Wednesday it was South Gippsland’s turn and there was standing room only at the Leongatha Football Clubrooms. The crowd numbered several hundred and included not only dairy farmers, but also representatives of the many ancillary industries impacted by the milk price plunge, such as stockfeed and fertiliser companies.

Yanakie dairy farmer Ashley Zuidema, who was among the crowd, reported there was tension in the air. “People are upset,” he said.

The MG management representatives, who included chairman (and Yanakie dairy farmer) Philip Tracy and interim CEO David Mallinson, addressed the crowd and then handed the microphone around for anyone who wanted to have their say.

Mr Zuidema said the suppliers appreciated the opportunity to have the situation explained to them and to air their views. The meeting was meant to finish at 1pm but was allowed to continue for another twenty or so minutes, giving more people the chance to speak.

The majority of dairy farmers at Yanakie are MG suppliers and facing similar challenges, said Mr Zuidema, with the low rainfall of recent times exacerbating the worry.

Milk prices, he said, go up and down. “That’s the nature of being a dairy farmer. I’m more worried about seasonal conditions. If we have to keep buying in hay lots of people will be in trouble.”

There has been some rain at Yanakie in recent times. “Enough to keep the rye grass I sowed growing, but nowhere near enough to fill the dams,” said Mr Zuidema, who is hoping against hope for a lot more rain before the cold weather sets in.

“Obviously the suppliers are very disappointed with our announcement, but lots of constructive comments were made for the board to take away,” said Mr Tracy.

The face of the MG Board is changing rapidly, with two directors stepping down in the last week. The announcement of the resignation due to ill health of Supplier Director Max Jelbart, of Leongatha South, came shortly before Keira Grant resigned as Special Director, after only a few weeks in the role.

In a further development in the volatile dairy industry, dairy processor Fonterra announced this week that it will be cutting the price it pays its suppliers this season. The retrospective cut, which was not unexpected following MG’s price slash, will see Fonterra prices fall from $5.60 per kilogram of milk solids to $5.

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