Murray Goulburn loses more suppliers

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The Weekly Times understands Murray Goulburn has lost more than 220 suppliers in Victoria and the Riverina since it announced its step-down in pricing last April.

About 30 Gippsland dairy farmers, 100 in the Western District and more than 100 in northern Victoria and the Riverina have left the company in the fall-out from the milk price crisis, sources say.

Some MG milk suppliers have retired, but most have left to go to other dairy companies.

The exodus since October, when MG last updated the Australian Securities Exchange, means MG has lost more than 160 million litres in supply, based on its average milk production of 1.6 million litres from each its 2200 suppliers.

At a recent supplier meeting, dairy farmers were told MG might have to close four factories if it lost more milk.

One farmer who attended a meeting in northern Victoria said MG did not identify which factories were in the firing line.

An MG spokesman said the co-operative was reviewing its business operations.

“This is to balance our processing capacity in line with our future milk intake, ensuring optimum efficiency across our manufacturing facilities,” he said. “We will announce the results of this review once complete.”

It comes as MG has cut a manufacturing shift at the Cobram factory.

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A dairy industry source said employees were told by MG in late December it was cutting a shift right through to late September or early October.

A Western District dairy farmer, who did not wish to be named, said there were several B-double milk tankers lying idle at Murray Goulburn’s Koroit factory, indicating there was less milk to be picked up.

“The tankers would not normally be there in large numbers,” he said.

MG said it had provided an update on MG’s milk intake on October 20 and “our production plans have been revised accordingly”.

Murray Goulburn told the ASX on October 20 it expected to lose about 350 million litres of milk this season through supplier departures to other processors and retirements from the industry.

Another 350 million litres was expected to be lost due to wet seasonal conditions.

It has not updated the market of any changes since then.

Listed companies are required to disclose market-sensitive information to the ASX under the exchange’s continuous disclosure rules.

The MG spokesman said the co-operative would make another statement when its half-year results were released on February 24.

Industry sources said Bega Cheese, Lion, Fonterra and Australian Dairy Farmers Corporation had picked up disaffected Murray Goulburn suppliers in recent months.

ADFC chairman Scott Sieben told The Weekly Times two weeks ago his company had signed up about 30 million ­litres in extra milk from dairy farmers supplying other processors.

Mr Sieben said about 10 million litres had come from southwest Victoria.

The Weekly Times understands MG is claiming some dairy farmers signed up by ADFC are still contracted to the co-operative.
Source: WeeklyTimes

Link: http://www.weeklytimesnow.com.au/agribusiness/dairy/murray-goulburn-loses-more-suppliers/news-story/55d5bc8e89ddd743de81c8114623cf39

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