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Murray Goulburn will consider all offers

By Rodney Woods

Murray Goulburn will accept formal proposals from other businesses but any change in ownership would need to be approved by farmers.

Murray Goulburn CEO Ari Mervis has told suppliers the coming months will be pivotal for the future of the business as the board and management finalise substantial business improvement programs.

He said third parties would be “given an opportunity to submit formal proposals to the company”.

“Ownership of Murray Goulburn remains with our farmer suppliers,” Mr Mervis said.

“Our constitution restricts any one owner to 0.5 per cent of the issued capital. To change this, 90 per cent of our farmer shareholders would need to agree.”

Mr Mervis said Murray Goulburn would consider debt funding milk price payments by up to $100 million if it suffers further reductions in milk supply. It has budgeted supply falling to 2 billion litres.

“Our focus is on maintaining a competitive milk price to shore up the two billion litre lower milk intake that we have and, given that lower capacity, allocate our milk intake to those product streams that are the most profitable,” he said.

“We came out earlier than usual with our opening price in response to suppliers who wanted us to come out early. We are maintaining $5.20/kg MS and our underlying assumptions support this price.

“We also have $100 million of funding in place if required to support this price.”

Mr Mervis admitted the past financial year had “tested the strength and resolve of MG and its suppliers”.

“What suppliers can expect in the coming year is a committed management team that will do everything it can to restore farm gate milk price,” he said.

“Unfortunately these things are not solved overnight; we need to work through the issues thoroughly and properly.”

In terms of the company’s financial position, Mr Mervis said the difficult decisions that had been made were showing positive results.

“Hard decisions taken are starting to pay off,” Mr Mervis said.

“We have managed our debt level down, exceeded our target in working capital reduction and are focused on improving returns across the business.

“Clearly there is still work to be done. The price that we have paid is not as competitive as some of our competitors out there, and some of our suppliers have been under some financial stress and have taken the decision to move to other processors.”

One of those to move on is Invergordon farmer Mark Norman, who now supplies Australian Consolidated Milk.

“There is no doubt in my mind that I wouldn’t have been able to milk cows for another 12 months on their (Murray Goulburn’s) prices,” Mr Norman said.

Despite this, Mr Norman said there would be a different feeling around the industry if a new owner took the reins.

“It is such a great company and an icon of the industry, it would be a sad day for the dairy industry if it were to be sold.”