Posted on May 13, 2017
WHEN John Hunt walked into the Melbourne office of maligned milk processor Murray Goulburn earlier this month, it was a tough ask.
It came just a day after Murray Goulburn’s management team announced the closure of three manufacturing facilities in Victoria and Tasmania at a cost of 360 jobs.
It also said it would suspend dividend payouts and abandon plans to claw back payments from dairy farmers.
While the news was good for South Australian farmers, the SA Dairyfarmers Association chairman knew three communities would be reeling from the announced closures.
Then there was the emotional baggage of representing dozens of SA dairy farmers still struggling with Murray Goulburn’s decision 12 months ago to suddenly slash their payments – and being among those directly affected.
“When they came out with the announcement it was a relief that someone had finally made a decision and taken a direction, it feels like it has been a rudderless ship for the last 12 months,” says Mr Hunt, who milks 600 cows near Mount Gambier, supplying Murray Goulburn for the past 10 years.
“But the first thing I felt was for the families and the towns, we know what it’s like to live in a small community.”
It’s been a tumultuous year that the state’s dairy farmers hope to never experience again.
There’s been an Australian Competition and Consumer Commission (ACCC) inquiry into the dairy industry launched and an accompanying upswell of consumer support.
Then last month, the competition watchdog announced it was taking Murray Goulburn to the Federal Court, alleging the co-operative misled farmers about prices it would pay for their milk before announcing a shock cut to the price in 2016.
As the dust settles — not only for the 50 or so SA dairy farmers still supplying Murray Goulburn but for all 220 operating in the state — Mr Hunt thinks it may at least yield positive results.
“When consumers got behind us and started buying branded milk it gave us a lift because you knew you weren’t just sitting there on your own, farmers are very proud people and they don’t like to come and say publicly that they are struggling,” he says.
“(There’s been some decisions made) and now the global dairy auction has also lifted so our export price should lift, there’s hope on the horizon that things are on the way up.”
ACCC Commissioner Mick Keogh is well aware of the past year’s struggles after overseeing eight dairy forums around Australia and receiving thousands of documents from dairy processors and the three major supermarket retailers since the ACCC inquiry started in November last year.
He is now wading through documents with plans to have a report with recommendations ready by November 1.
“The Murray Goulburn announcement is good news and was welcomed by farmers but we have the message loud and clear to make sure those things don’t happen in the future,” he says.
SA Dairyfarmers chief executive Andrew Curtis – who met Murray Goulburn’s new chairman John Spark and chief executive Ari Mervis alongside Mr Hunt – acknowledges there are no quick fixes when supermarkets are still selling milk for $1 a litre and cheese for $6 a kg.
The prices don’t come near to covering costs.
“But it’s reassuring to have it acknowledge that something appears to have happened,” he says.
“And it’s good to see that there’s now someone in control of Murray Goulburn and making business decisions with a view to having the business moving forward.
“(At our meeting) they were there and they were listening and they were making decisions.”
As the focus on the state’s dairy industry sees farmers look for new supply models with retailers and processors, some are already ahead of the game.
At Nietschke Moppa Estate, farmer Jamie Nietschke is spreading risk by growing grapes on his Barossa property and negotiating more creative contracts.
The farm milks just over 200 cows year round and Mr Nietschke says in the past year his business model has helped shield his family from industry fluctuations.
Some of the milk goes to the Barossa Valley Cheese Company in Angaston but most is sold to Woolworths and the Farmer’s Own brand through a model where he supplies direct to the retailer through the Barossa Mid North Dairy Group co-operative.
The group of 14 dairy farms managed to directly negotiate a higher, fixed minimum price for three years.
“For us it’s been a real win, but we certainly feel for the Murray Goulburn suppliers and the pain they have gone through, something needs to change in the supply model,” he says.
“At the moment, farmers are largely getting the raw end of the deal, we are at the bottom of the food chain so to speak despite us being the suppliers of the food chain.”