COMMENT
Stephen Dwyer
WITH the imminent closure of the once bustling Maffra Factory, we need to learn from the serious mistakes of the past and hope that we will have a future with more forward-thinking people.
Maffra Co-op was a million-pound-a-year company by the 1950s. It had half the Macalister Irrigation District in its grasp, apart from a pocket loyal to Nestlé. The other half of the dairy-rich MID was with Heyfield.
Amalgamations were the rage and Murray Goulburn was in its infancy, and was little more than a tin shed at Cobram.
Common sense said an amalgamation between Heyfield and Maffra would provide a powerhouse. Its farmers were concentrated. Transport costs were at a bare minimum.
Unfortunately common sense did not prevail. Personal animosity and the usual divide between Maffra and Heyfield in the Maffra Shire got in the way of common sense.
With ‘amalgamation to survive and grow’ being the catch-cry, instead Heyfield sought a union with Glengarry and Gormandale; distant farmers without the reliability of irrigation.
Maffra threw its weight to the towns of Orbost and Cann River, forming Gippsland Consolidated Milk.
The result was a catastrophe for both companies.
Transport was a killer and the once-concentrated MID, with its concentration of dairy farmers making a great living out of its prosperous industry, was now diluted.
Heyfield and Maffra co-ops were now going bust. They combined to form Gippsland Amalgamated Milk Products. All it did was make a super-broke company.
This co-op was ripe for the picking and was taken over and given a lifeline by the still-growing Murray Goulburn Co-op (MG).
MG, with the genius of Jack McGuire at the helm, knew no bounds. But on his retirement things went bad; it was on its knees when the then-chairman Bill Paterson announced at small halls around the district that MG’s price of 50 cents a kilo was unsustainable, and it could pay as little 35 cents.
In a stroke of genius, he brought back Jack McGuire from retirement, and with prudent decision-making, turned the company around.
We weren’t so lucky when another managing director wreaked havoc after being paid in excess of 12 million dollars. Gary Halou brought the company to its knees with a strategy that involved huge incentives to some sales of milk to supermarkets, to be sold for $1 a litre and a floating of the company on the stock market.
The day of the float, every co-op shareholder had his shareholding diluted by the number of new share issued. The milk price and value of milk in the public’s eye has only recently returned.
A board designed to look after the interests of each region was secured.
Gippsland had four directors; it ended up as one from Maffra and three from Leongatha/Yarram.
The Maffra plant, with its dryers and a gas supply second only to Sale, was put into a holding pattern. Leongatha, with a factory in the wrong part of town surrounded by hills, was earmarked for expansion.
Millions were wasted on the ageing plant. With Gary Helou given free rein and disastrous decision-making by the board, MG was on a downward spiral. The result was the disaster of telling farmers to expect $6 a kilo when the co-op was losing money.
Of course, this didn’t affect the shareholders – they would still get 17 cents dividend on every share and MG would make a paper profit of $150 million.
They created clawback to extract already-paid money from farmers with a reduced milk price. The board, of course, instead of fixing the problem, made it worse.
Men like former chairman, Ian McCauly, who knew the company and warned against the failed strategy, should have been embraced. Instead he was shunned.
The bleeding of suppliers to other companies became a flood. The board announced it would sell to Saputo. There would be no other option.
Lino Saputo came and of course assured everyone that he was not motivated by greed and money, but by his dear old granny who used to churn the butter churn in the old family house. He would keep all factories.
If only granny was alive today – we could get her to set up her churn in the shell that is Saputo Maffra.
So now the MID, with its huge supply of dairy farms, has no factory.
There is a glimmer of hope – Burra leads the field on price to farmers, working out of the former non-needed and discarded MG Korumburra factory.
Can we indeed learn from history?
Stephen Dwyer is a Newry dairy farmer
