THE mayors of five northern Victorian municipalities have sent an unprecedented joint letter to Australia’s largest dairy processor, Murray Goulburn pleading it rethink its retrospective farm gate price clawback.
Described as a “rare occasion” for mayors from the shires of Campaspe, Gannawarra, Greater Shepparton, Loddon and Moira – which makes up the Goulburn Murray Irrigation District – to sign a joint letter, it questioned the thinking that has gone into Murray Goulburn’s adjustment plan.
In late April, the processor slashed the price it pays to suppliers for the entire 2015/16 season from $5.60 per kilogram of milk solids to between $4.75 and $5 per kilogram.
Earlier this month it opened the 2016/17 year with a price of $4.31 per kilogram of milk solids, which is forecast to rise to $4.80 by next April.
“Murray Goulburn’s 2015 annual report speaks in glowing terms about the company’s bright future and your own headline chair’s report presents ‘the co-operative as well placed to manage market volatility, pursue growth and deliver sustainably higher farm gate returns in the years ahead’,” the letter, addressed to chairman, Phillip Tracey, read.
The letter argued that the former managing director, Gary Helou, who stepped down in the immediate aftermath of the price slash announcement, canvassed the volatility and downward trend of global milk pricing and demand in the same annual report.
“[He] then goes on to take great pride in a record high farm gate price, ‘which ensures suppliers are always up-to-date and could continue to plan for the season’,” it read.
“As we now know, nobody planned for their milk payment to be retrospectively reduced without notice in the final quarter of the 2016 financial year.
“It’s inconceivable that families that have been loyal to Murray Goulburn for generations must now bear the financial burden of such inept analysis of market conditions and company returns.”
The letter stated that the “financial penalty” has sent shockwaves through small to medium rural communities throughout the region.
“As a consequence, many families and small businesses will go to the wall as their liquidity falls away,” it read.
The mayors have called on Murray Goulburn to find another financing strategy to manage a $220 million over-payment, rather than expect farming families and small business to cover this cost through increased debt.
“We totally reject the notion that farming families and small business should carry this debt at an individual level,” they said.
The penning of the letter comes days after two suppliers – Paul Mundy, from Cobram East, and John Bell, from Invergordon – called for an extraordinary general meeting in October to coincide with the co-operative’s annual general meeting, where the current board will be asked to re-stand and “at least” seven new directors be appointed.
