South West Victorian Murray Goulburn (MG) suppliers have said they’ll stick with the co-operative, despite its troubles.
MG has announced its milk volumes have been slashed by more than a fifth, while revenue has dropped by more than 10 per cent.
But Macarthur dairy farmer Craig Dettling said the result was “better than the worst case scenario” being touted by some critics. He said the amount of milk being processed was not as important as what it was being turned into.
“It’s about directing milk to the highest returning products,” Mr Dettling said.
Mr Dettling also said he believed cost savings, which had been found last financial year and would continue into this year, would also start to show up. “At the moment they haven’t been able to resize quickly enough,” he said.
Whilst the farmgate milk price of $5.20kg/MS was lower than other processors, it was about protecting the future and ensuring further returns were passed onto farmers.
“It’s about servicing the suppliers MG has got, about getting to the right size quickly and only taking additional suppliers if extra milk is needed,” Mr Dettling said. “If it can move quickly enough, it can shut the gate and worry about its own members – don’t worry about the rest.”
Naringal’s Hayden Ballinger said he milked a 420-strong herd and intended staying with MG.
“We are contracted from when we shared up. Having said that, I am still a big believer in the importance of having a strong co-operative,” Mr Ballinger said.
“We are in as much financial pressure as anyone else, so the temptation (to move) is out there.”
Mr Ballinger said it was easier to stay with MG as he remained contracted to the co-operative for about another 12 months.
“As hard as it is, I completely understand, but it can become a self fulfilling prophecy as people lose faith.
“There is clearly uncertainty there and there is no question other factories are going to take advantage of MG’s position and try and secure supply.
“As more and more leave it gains momentum and as more leave it weakens MG’s position and it can end up being its own undoing.”
He said MG had “taken a beating”, and media reports had not helped reduce the amount of fear that had spread around the co-operative.
“If we lose a strong co-operative we could go the way of the United Kingdom, which saw the price for everyone weaken because there was no co-op to underpin value.
“MG management made some poor choices but I think it comes back to the tall poppy syndrome; it’s easy to knock MG.” Trust was still “a big thing - with no disrespect to the new chief executive and chairman,” he said.
Simpson’s Aaron Crole has 323 head on 222ha and said he was also contracted to MG, which made the decision to stay easier.
“We had people ringing us (to take our milk) but it’s easier to make a decision when it’s done and we can’t go, so there is no need stressing about it,” Mr Crole said.
He said there were still a number of unknown factors, which could play out between now and when he was out of contract.
Mr Crole cited the volatility of the Australian dollar and continuing lack of trust as issues, which could play a part.
But he said he was confident MG could come out of its current woes.
“I think we can turn the ship around and get it afloat – it’s just a matter of how long it will take.”
And Woolsthorpe’s Joe McLaren, who farms with his father Brian, said they would stay with MG – for now.
He said while it would be Brian’s decision as to whether to stay or go and whether or not the 700-herd farm would remain with MG.
“It’s a little bit of an uknown, as to where its leading and what it’s doing,” Mr McLaren said.
“At this stage it’s what we have committed to – but milk volumes being down have got to be concerning for everyone involved.”
He said the family had supplied MG “for a long time.”
“We need the co-operative to keep the industry alive but at the end of the day, it’s a discussion we have had.”
He said he was confident MG’s fortunes could be turned around.
“I think you have to think like that, if you don’t think like that, you're going backwards.”
