Murray Goulburn signs Coles deal

MURRAY Goulburn has announced a 10-year partnership to supply Coles with daily pasteurised milk for its private label brands in Victoria and New South Wales from July 2014.

Separately, the dairy co-operative will also relaunch Devondale-branded daily pasteurised milk, through an initially exclusive agreement with Coles, and Devondale cheese will return to Coles’ shelves.

The milk price paid by Coles under this unique agreement locks in a premium that will deliver additional profits to Devondale dairy farmers over the life of the contract. The premium is not affected by price fluctuations in international dairy markets or movements in the Australian currency and the contract contains rise and fall provisions to protect the premium farmers receive.

As a co-operative, Murray Goulburn will return 100 per cent of the profits from this agreement to its farmer shareholders through higher farm-gate returns.

Murray Goulburn managing director, Gary Helou said the daily pasteurised milk segment was  mainly supplied by foreign-owned companies which repatriate their profits to overseas shareholders.

“The entry of Australia’s farmer owned co-operative into this market segment cuts out the middle man and delivers profits directly to farmers,” he said.

“This is a logical growth opportunity that extends Devondale’s domestic presence in consumer markets and is expected to lock in returns that will be paid to farmers through higher farm-gate prices. These higher prices will benefit all dairy farmers.”

Murray Goulburn will invest about $120 million in the construction of two state-of-the-art milk processing plants in Melbourne and Sydney. This is the most significant investment in dairy processing technology since the dairy industry was deregulated in 2000.

The new plants will incorporate the world’s latest processing technology to deliver the highest possible quality standards while also assisting to position Murray Goulburn as the nation’s most efficient producer of daily pasteurised milk. This is consistent with the co-operative’s objective of being an industry leader in quality, operating excellence and innovation in pursuit of higher returns to dairy farmers.

Murray Goulburn will actively seek to grow its milk supply to meet the demands of this new contract and will be taking on new farmer-shareholders across existing and new supply zones. This includes growing a local milk supply in the Sydney region to support the Sydney processing plant.

“The newly-launched Devondale daily pasteurised milk will extend our branded product range and increase awareness of the Devondale brand amongst consumers,” Mr Helou said.

“We are also very pleased that Coles has agreed to again range Devondale-branded cheese products.

This new ranging is expected to add significantly to the sales of Devondale cheese and further increase farm-gate returns to dairy farmers.”