AUSTRALIA’S largest milk processor is headed to the Federal Court after the ACCC ruled its decision to slash farmgate prices last year breached consumer law. By Aaron Langmaid.
The ACCC has slammed Murray Goulburn for allegedly engaging in “unconscionable conduct’’ and misleading its suppliers.
It will also claim former managing director Gary Helou and chief financial officer Bradley Hingle supported a price promise to farmers, knowing the market outlook was bleak.
“Murray Goulburn’s conduct towards farmers was unconscionable,’’ ACCC chairman Rod Sims said.
“The farmers relied on Murray Goulburn’s representations and were not expecting a substantial reduction in the farmgate milk price, particularly so close to the end of the season when it was not possible for them to practically readjust their expenditure.”
Last year’s dairy crisis sent Victoria’s industry into free fall when MG slashed farmgate prices to $5, despite earlier predictions farmers would get more than $6.
It resulted in nationwide backlash as hundreds of farmers hit the wall and Federal and State governments swooped to offer assistance grants.
Murray Goulburn supplier and lifelong dairy farmer Glenn Crawford welcomed the court action but worried it was too little too late.
“Gary Helou is sitting in his bloody Sydney mansion and I’m down here milking 180 cows a day and going backwards, it’s just wrong,’’ Mr Crawford said.
“These people need to be called to account.’’
The farmer admitted he had started taking medication to beat depression since the crisis as the bills kept mounting.
“We are plodding along but we’re just getting deeper and deeper into debt and I don’t think most people really understand.’’
United Dairyfarmers of Victoria president Adam Jenkins said court proceedings would force MG to finally show some accountability.
“This will offer a little bit of closure,’’ he said.
“It didn’t feel right what happened last year. Farmers have been bearing all the risk for management’s decision.
“It felt wrong and it needed to be stamped out.
“Now farmers can draw a line in the sand and start rebuilding confidence in the processes.’’
In a statement, the ACCC claimed
KNEW farmers relied on price forecasts to make business decisions;
WAS aware that many farmers were unable to easily switch milk processors, particularly those contracted to MG;
CREATED an expectation that the opening price was `”conservative’’;
PROVIDED and maintained price forecasts despite knowing that they were overstated and unachievable.
The court action comes as Murray Goulburn is expected to unveil a new cost cutting strategy next week which is likely to include the closure of at least two of its plants.
The ACCC is seeking orders against Murray Goulburn that include declarations, compliance program orders, corrective notices and costs.
It will not to seek a pecuniary penalty because, as a co-operative, that could impact farmers.
Ian Hitchings, a long time MG supplier at Wonthaggi said the court action was welcomed by farmers but was torn over what it might actually achieve.
“Mistakes were made,’’ Mr Hitchings said.
“But the subsequent loss of suppliers since the crisis unfolded has collectively done as much damage as farmers have left to sell milk elsewhere or quit the industry all together.’’
In a statement this afternoon Murray Goulburn said it was “considering proceedings’’.
Source: Herald Sun