Dairy co-op sus­pends sup­plier sup­port plan

Campaspe News - - NEWS - By SO­PHIE BALD­WIN

MUR­RAY Goul­burn has sus­pended its Milk Sup­ply Sup­port Pack­age (claw­back) for the cur­rent sea­son.

In May the co-op­er­a­tive sent the dairy in­dus­try into a tail­spin when it an­nounced it was cut­ting the milk price — and said sup­pli­ers had been ‘over­paid’ and would have to re­fund a large por­tion of their milk in­come for the 2015-16 sea­son.

Not long af­ter Fon­terra fol­lowed suit, plung­ing the in­dus­try into de­spair. To rub salt into the wounds of Fon­terra sup­pli­ers, the New Zealand-owned com­pany then went on to an­nounce an af­ter tax profit of $800 mil­lion for the 2015-16 sea­son.

The fall­out from these an­nounce­ments has been enor­mous — some farm­ers have been forced to quit and sell up, buried un­der a moun­tain of un­planned debt, while oth­ers have re­duced stock num­bers and slashed op­er­at­ing costs in a des­per­ate bid to hang on in the in­dus­try they love.

One thing that is for sure, it has been a stress­ful and wor­ry­ing time for the re­gion’s dairy­ing in­dus­try and wider eco­nomic com­mu­nity.

Mur­ray Goul­burn’s lat­est de­ci­sion has been made af­ter it recog­nised the se­vere fi­nan­cial strain its sup­pli­ers were fac­ing due to wet con­di­tions, low milk prices and the MSSP.

In­terim chief ex­ec­u­tive David Mallinson said it was MG’s ab­so­lute pri­or­ity to re­turn cash to farm­ers’ pock­ets while be­ing fi­nan­cially pru­dent.

Sus­pen­sion of the pay­ment should add an ex­tra 14 cents per kilo­gram of milk solids to cash flow — ex­cept at the same time the co-op has down­graded its end of year fi­nan­cial price from $4.88kg to $4.70, leav­ing farm­ers a fur­ther 4 cents out of pocket per kilo­gram.

The co-op has of­fered a growth in­cen­tive pay­ment to sup­pli­ers who in­crease pro­duc­tion for this sea­son com­pared to last year, an in­cen­tive that will be un­ob­tain­able for many.

Nan­neella’s David Glass is wait­ing for con­fir­ma­tion from his field of­fi­cer but his early un­der­stand­ing is the co-op has taken away the claw­back for 12 months, but dropped the fore­cast EOY price.

‘‘It may help with our cash­flow in the short term but it still doesn’t give me a huge amount of con­fi­dence,’’ Mr Glass said.

‘‘There are some great in­cen­tives in there for growth but who is go­ing to make them when ev­ery sin­gle farmer I know has ex­pe­ri­enced pro­duc­tion losses for the year due to the ex­tremely wet con­di­tions and through re­duced herd num­bers.’’

He also ques­tioned what hap­pens with the MSSP af­ter the end of the fi­nan­cial year?

To add to in­dus­try woes, the wet spring has com­pro­mised hay and silage qual­ity with most farm­ers un­able to get onto their pad­docks to cut fod­der at the op­ti­mum time.

While there will be quan­tity around, sourc­ing good qual­ity could be­come a prob­lem and will fur­ther im­pact on pro­duc­tion losses through the sea­son.

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