The embattled Australian co-op Murray Goulburn (MG) has announced the cancellation of the Milk Supply Support Package (MSSP), with a Profit & Loss impact of $148 million. In April 2016, the MG Board revised downward the farmgate milk price forecast for 2016.
In 2016, MG paid an average cash price for milk to suppliers of $5.53 per kgms. This included $0.73 cents of MSSP support (to be clawed back from suppliers at a later stage). The co-op had forecasted a milk price of $6.05 per kgms prior to the April 2016 decision. The MSSP was introduced as the Board did not want to pass on the full impact of its price revision as a sudden shock when markets were at their lowest point.
Murray Goulburn also announced the closure of four facilities with 360 employees impacted. Once completed, the closures are expected to deliver annual savings of $40-$50 million. The co-op also announced several other cost efficiency measures.
Meanwhile, the Australian Competition and Consumer Commission has started formal proceedings in the Australian Federal Court against MG arising from the decision to revise their milk price forecast in April 2016. It is alleged that MG engaged in unconscionable conduct and made false or misleading representations in contravention of the Australian Consumer Law.
Murray Goulburn’s milk pool is 3.6 billion litres with 2,200 milk suppliers, representing 36% of the Australia’s total milk output.
Agri Food Policy Executive
17 Jan 2018
17 Jan 2018