Locals predict changes at Koroit processing plant

By Rick Bayne

Murray Goulburn suppliers in south-west Victoria believe the co-operative’s sale to Canadian company Saputo will have consequences for the Koroit manufacturing plant.

Under the proposed deal, Saputo will acquire all MG’s operating assets for $1.3 billion.

With the existing Saputo Warrnambool Cheese and Butter plant just 27 km away MG suppliers in the Koroit district are confident the local plant will remain but believe there will be job cuts.

Woolsthorpe farmer Brian McLaren said the sale and promises for suppliers were the best possible outcome, although he laments the loss of the cooperative.

An MG supplier for nearly 50 years, Mr McLaren had been looking at other options in the wake of lower opening prices this year but stayed with the cooperative.

“I’m disappointed the co-op had to finish this way because of what it stood for and what it was, but it’s the best scenario we can hope for,” - Brian McLaren

“We could have finished up like Bonlac and they got nothing for their shares.

“With this arrangement there will be something in it for my shares, although there’s no promise for the last 25 per cent.

“Seventy five per cent is better than nothing, and nothing could have been the alternative.”

“As long as we can get the price to $6, which is where it should be, we should be okay.”

Mr McLaren said he expected the Koroit factory, which he supplies, to be retained.

“I’m confident Saputo will want that running. Because they took so many suppliers, they can’t process all that milk they’ve got now at Allansford, so what else would they do with the milk?”

He predicted a change to the product mix and some job losses at Koroit, “but there’s no way known they would buy it to shut it down”.

Koroit dairy farmer and former MG site manager Tom Paton said he was worried about what might happen to the Koroit factory.

“I’d like it to stay as a Koroit Co-op. I know investors who would be interested but they wouldn’t even give us a price.”

“Why couldn’t a group of farmers in the Western District get together and say: let us operate the plant?”

Mr Paton said he believed developing organic products would boost the Koroit plant.

“The price of organic powder overseas is unbelievable, and there is a world shortage of butter and infant baby powder and that plant can do both.”

Mr Paton said what had happened over the past few years leading up to the sale was “wrong”.

“How come a company can come out and buy the lot and operate it and make money?” he asked. “How come Murray Goulburn can’t?”

“It’s so wrong what they’re doing. There was a photo in the local paper of people in the pub celebrating Canadian people taking over. They’re going to get the biggest surprise of their lives.

“Saputo can’t keep everyone employed; it’s going to be a dark day for the town very shortly.”

Koroit farmer John Bushell said it had been “a massive balls up” over the past three years and while he predicts things will be better for the next few years, he’s uncertain of the long-term future.

“Everyone says you need a co-op but for the past three years the co-op has been the worst thing we’ve ever had,” Mr Bushell said.

Mr Bushell feared world markets and less competition would cause more headaches for farmers.

“I hope it’s going to be good but gut feeling tells you with no cooperative it’s going to be dangerous. When it was good it was good for the industry; the past three years it’s been a thorn in our side and thank God there was some strong competition.

“You need a crystal ball to know what’s going to happen. It’s probably going to be great for a year or two but once it settles in you know what’s going to happen.”

Mr Bushell has starting rearing and selling Friesian steers for an alternate source of income.

“I’ve cut my dairy numbers right down and it’s the best thing I’ve ever done. The processors don’t understand that farmers are going to divert. Farmers struggle at $6 let alone $4.70.”

Brian McLaren is confident Saputo will retain the Koroit facility.