Whorouly farmer tells dairy board to resign
Producer counts the cost of milk price debacle
WHOROULY fourth-generation dairy farmer Rod Newton owes his milk supplier $400,000.
Murray Goulburn – the company which over-inflated the price it would pay for milk in the face of a contracting global dairy market – insists on clawing back from Mr Newton money it advanced to him in a market that everyone knew was falling.
Everyone – that is – except the co-operative’s board members.
Mr Newton milks about 600 cows at peak on his owned and leased 650-hectare dairy farm south east of Wangaratta.
He has supplied MG with 5.5 million litres of milk since last August after he decided, with his family, to change processors after supplying to Dairy Farmers since 1970.
“I changed to MG because I thought the industry needed a strong milk supplier like MG, so I bought enough shares and I am now locked in for the next three years,” Mr Newton said.
“The funny thing is my Dad always vowed he would never go to MG and I wish I had of listened to him.”
Because one of Australia’s largest dairy processors guaranteed that a price of $6 per kilogram of milk solids would remain, Mr Newton borrowed to buy feed to get him through the drought to ensure his cows could continue to produce the greatest possible milk volume.
He also borrowed money so he could plant pasture to feed his cows over the winter months and to buy shares in MG when it floated on the stock exchange last year.
It was, according to Mr Newton’s financial advisers, “a good investment”.
From July last year, it is alleged that company reports given to MG senior managers demonstrated that milk was suffering big losses every week, but farmers were still being paid the $6 per kg that MG promised they could easily pay for 12 months.
The company is now demanding the money back over three years with interest.
Mr Newton describes the news of the milk price cut as “massive and gut wrenching”.
“We are a fairly established and reasonable-sized farm,” he said.
“Some land for sale recently came up so we bought a couple of properties which put our business at risk, but we needed to expand.
“So the decision to not only cut the milk price but that fact they want the money back cost us $330,000 overnight.
“The worst will be next year, trying to survive and then still having two more years of lower milk prices and still having two years and three months of a contract I have to honour with (MG).
“We have no choice but to pay the money back because we are under contract with them.”
Mr Newton is adamant that those farmers supplying milk to MG have to question the board about what went wrong and in turn, those board members need to provide an answer as to what they are going to do to change the way they will conduct themselves in the future.
“Simply saying they didn’t know and that they are very sorry just doesn’t cut it,” Mr Newton said.
“If they didn’t know what was going on they are incompetent.
“Every other dairy company in the world predicted lower prices, so what are they hiding and what are they going to do to fix it to streamline the business just like every farmer has had to do while they push all the debt back onto us.”
While Mr Newton does not think that a class action is the answer to making the board members accountable for their decisions, he is interested in what the outcome of the Australian Competition and Consumer Commission (ACCC) inquiry might be.
“What we need now is someone to be able to articulate where we all stand and put steps in place to move forward,” he said.
“If the board is found to be negligent – and included in that would be the information they provided in their Public Disclosure Statement – I would think every contract would now be null and void as people signed up on the basis of the information in that document.
“If that is flawed, then how can it be enforced?
“The board now has no respect in this industry and you cannot trust what they are saying or telling us,” Mr Newton said.
Whether Mr Newton will continue to supply to MG after his contract is finished is a question he cannot answer but he certainly has a message he wants to send to the board.
“I have a question for any direc- tors that may read this,” he said.
“How can you look at yourself in the mirror and be part of the board and not step back and get some new blood in there that can move forward and who will be more open and honest for the future?
“These people have been in charge of a corrupt mess and allowed themselves to be bullied into decisions and not done anything about it or stood up for the farmers.
“At least resign and let a fresh lot of eyes come in and look at it.
“There have been no checks and balances and they gambled with our money.
“The industry needs a strong MG as they are the price setters, but we need the board to be strong and not run by yes men but by people who are realists.”
According to Mr Newton the recently announced federal dairy assistance package needs a lot more explanation and he encourages everyone who has been affected by the price cuts to “keep talking to friends and have them help you take your mind off it for a little while”.
“You know, what I really don’t understand is that if MG were going through a rough patch they could have told us instead of pretending everything was okay,” he said.
“But instead, they put money into this infrastructure program where there is no guarantee, particularly in this environment where they should have pulled their heads in like farmers now have to.”
Mr Newton said “those people in charge just kept steering their course without questioning it.”
He now wears the cost.
STAYING STRONG: Dairy farmer Rod Newton is encouraging those affected by the milk price cuts to keep talking to friends and have them help each other take their minds off it.