DAIRY farmers across the region are coming to grips with the shock collapse in the price paid by dairy giant Murray Goulburn to its suppliers.
Industry analysts are predicting a flow-on effect to other milk processors, and while Bega Cheese and Warrnambool Cheese and Butter have indicated they will hold their price, there is speculation the other large player, Fonterra, will follow MG’s lead and drop its prices.
The fallout for suppliers from the late season drop in prices will be compounded by MG being forced to borrow money to pay its farmer suppliers $5.47 a kilogram for the remainder of this financial year, down from the promised $5.60 and the hoped for $6.05.
But MG supplier farmers will then be compelled to repay this money in the form of lower milk prices for the following three years.
Dairy farmers and investors are asking whether the blame lies with Murray Goulburn’s management team or an unworkable capital structure.
Melbourne law firm Slater and Gordon has announced it is considering undertaking a class action suit with its investigations centred on whether the guidance provided by Murray Goulburn in its initial product disclosure statements were accurate in regards to achievable profits.
MG chairman Phil Tracy and interim managing director David Mallinson will visit Maffra on Wednesday night to explain the situation to suppliers.
“We will be working our way around our entire supplier base,” Mr Tracy said.
“We will be holding town hall meetings with farmers, and I am sure they will be well attended. We are trying to be transparent and open. We want to help explain the situation to the suppliers (so) they understand the market.”
The Maffra meeting will be in the Maffra Memorial Hall from 7.30pm on Wednesday.
A meeting will also be held at Leongatha at the Leongatha football clubrooms, Roughhead St, from 11.30am on Wednesday.
Dairy Australia has responded to the Murray Goulburn downturn by accelerating rollout of its ‘Tactics for Tight Times’ program.