Murray Goulburn delivers its farmers a last kick in the guts
AFTER months of speculation it seems the fate of former Australian dairy giant Murray Goulburn has been determined after the co-op accepted a $1.31 billion deal from Canadian company Saputo.
The deal includes a 40 cent step up per kilo of milk solids and an additional 40 cent per kg milk loyalty payment for milk supplied for the 2018 financial year.
Shares have an estimated value of $1.10-$1.15 per share/unit.
In a letter to suppliers dated October 27, MG stated securing a sustainable future for remaining loyal suppliers was of great importance to the board.
‘‘Saputo is one of the top 10 dairy processors in the world and has demonstrated itself to be a credible and trusted partner for Australian dairy farmers through their investment in Warnambool Cheese and Butter,’’ chief executive Ari Mervis said.
The transaction is subject to ACCC and Foreign Investment Review Board approval and although a vote is not required by voting shareholders, the board has agreed to seek a majority approval.
The deal has left suppliers in shock as they were under the impression they would have some sort of say in their future.
Gunbower suppliers Stephen and Brooke Brown believe the decision is a disaster for the industry but at the same time, the couple haven’t been surprised by the news.
‘‘For the long-term future of the industry I am not sure if this is a good thing and I am shocked by the little say we have had and the little we have been told until the deal was done,’’ Stephen said.
‘‘This has been the fate of every single co-op in Australia and once people start saying unlock the value of the shares it’s time to head for the hills and run for cover.’’
Stephen said he hated the idea of the unit trust and the partial float from the beginning and he voted against the decision a couple of years ago.
‘‘You either float or you don’t and I think the conflict of interest between farmers and shareholders was going to always be there.’’
The couple chose to stay loyal to MG because financially it made little difference for them to change processors.
They milk 270 spring calving Jersey cows.
‘‘We have a high component spring calving herd and financially it was the best decision to stay because MG traditionally has always paid the most for butterfat,’’ Brooke said.
The couple said the increase in milk price is welcome and they will continue to stay until the end of the year.
The United Dairyfarmers of Victoria (UDV) is disappointed at the loss of the country’s largest farmer owned co-operative.
President Adam Jenkins said the agreement does provide the industry with some clarity and a path forward to repair trust and transparency.
“The Murray Goulburn Board has ensured the deal will be the best step forward for both suppliers and industry, but it is nevertheless upsetting that we have ended up here and we feel for long-term supporters of MG who feel gutted at losing the Australian co-op.’’ Adam said.
He also acknowledged that Saputo has built a good reputation within the industry and it is promising to have a company willing to invest $1.3 billion into the Victorian dairy industry.
IN SHOCK: Gunbower dairy farmer Stephen Brown and his wife Brooke believe the Saputo decision is a disaster for the industry.