Farmers abandoning Murray Goulburn

DISSATISFACTION: John Keely feels that his decision to leave Murray Goulburn has been vindicated by the co-operative's lower than expected opening price.

DISSATISFACTION: John Keely feels that his decision to leave Murray Goulburn has been vindicated by the co-operative's lower than expected opening price.

COHUNA dairy farmer John Keely is symbolic of deep dissatisfaction toward milk processor Murray Goulburn that has eventually manifested itself in a mass departure from the co-operative. 

A Murray Goulburn supplier for more than 20 years, Mr Keely stuck by the processor when it last year slashed the price it pays to farmers for their milk. 

The move away from Murray Goulburn began at the start of the 2016-17 season, when Fonterra was taking on new suppliers in the local area.

But Mr Keely harboured a deep distrust of Fonterra after it followed Murray Goulburn in cutting prices and announcing a clawback loan scheme. 

So he stayed put with Murray Goulburn, but then other suppliers moved into the area, including Bulla and Procal through the Australian Dairy Farmers Corporation, Bega through Tatura Milk, ACM and Lion.

Presented with an unprecedented array of options and no longer able to ignore his sickly bottom line, in February Mr Keely joined with 20 other local dairy farmers that dumped Murray Goulburn and began supplying milk to Bulla. 

Mr Keely said others had stayed on until July 1 and July 15 to ensure they received their loyalty payments before heading elsewhere, and he expected another exodus on August 15. 

"There have been some really dyed-in-the-wool long-time Murray Goulburn suppliers who have moved that you would never have thought, including a couple who said their fathers would turn over in their grave if they knew," he said. 

Mr Keely said it was hard to quantify just how many farmers had left Murray Goulburn, but there were plenty of indications that it was a significant number. 

"When the crisis started there were 328 suppliers to the Rochester factory, but that was down to 200 in May, and now there are only three Murray Goulburn suppliers west of Kerang, down from eight.

"They've just had enough of losing money and I don't feel they're getting a great deal of satisfaction about what's going on at Murray Goulburn." 

While pay structures are difficult to compare between processors and farms, Mr Keely - who milks up to 320 cows - is currently receiving $5.88 per kilogram of milk solids, compared to an opening price of $5.20 from Murray Goulburn. 

Murray Goulburn hopes to achieve a closing price of $5.50, while Mr Keely expects to receive between $6.00 and $6.20 from Bulla.

SENTIMENT: Farmers like John Keely are seeking better returns.

SENTIMENT: Farmers like John Keely are seeking better returns.

He said that equated to a difference to his bottom line of approximately $200,000 over the next 12 months – a figure he couldn't ignore. 

"It was either stay with Murray Goulburn and run at a loss for a third consecutive year, which you just can't do, or leave and make money," Mr Keely said. 

"There's no point being loyal if you're going to go broke. First and foremost you've got to look after yourself." 

Mr Keely said opportunities to move between processors were traditionally extremely limited and he saw it as a long-term shift, although he believed Murray Goulburn's plummeting milk supply meant the processor would take him back in an instant. 

He didn't rule out a return, but said the price on offer would have to be close to the top of the market for him to entertain the possibility. 

Despite his decision to leave, Mr Keely said Murray Goulburn remained vital to the dairy industry, and it would be disastrous if it collapsed. 

"If it fell over it would have a massive effect on the industry and there would be a lot of negative flow-on effects to communities," he said.

"That's why they need to be able to pay a competitive price, so they can maintain that supplier base.

"If they keep losing suppliers they will only have pockets of farmers here and there and then their costs go up enormously." 

He said management decisions by Murray Goulburn had undermined confidence in the once-vibrant cooperative, including the decision to announce an opening milk price of $4.70, before revising the price a fortnight later after other processors opened higher. 

"There was a bit of thought that Murray Goulburn's opening price was trying to dray the whole pricing down, but it did backfire to a degree because other processors saw it as an opportunity to grab milk," Mr Keely said. 

"For a lot of people around here, while they were happy to receive that extra 50 cents, it was only 16 days later and they were asking where the hell it had come from, and it really did reiterate that Murray Goulburn was trying to drag the milk price down."

Mr Keely said the ill-feeling was reflected at a recent meeting in Cohuna for farmers to meet the candidates for the upcoming Murray Goulburn board election. 

"They held a meet-and-greet the candidates day, and there were six candidates there and only three people there to meet them," he said. 

Mr Keely said those who had stayed with Murray Goulburn now had limited opportunities to go elsewhere.

"Fonterra is the only processor taking on more suppliers in this area is my understanding," he said.

Mr Keely meanwhile feels "deeply comfortable" with his decision to leave Murray Goulburn and is looking forward to the season ahead.

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