Mur­ray Goul­burn de­liv­ers its farm­ers a last kick in the guts

The Riverine Herald - - NEWS - By So­phie Bald­win

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.

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