With the sale of Murray Goulburn to Saputo, dairy farmers are now turning their attention to future milk prices.
At the extraordinary general meeting where suppliers gave their approval to sell the co-op to Saputo, MG chief executive officer Ari Mervis said current suppliers could expect terms “no less favourable” that their current situation until July 2023.
Saputo has committed to pay a competitive milk price that is no less than the greater price of the offer to Warrnambool Cheese and Butter, which is currently owned by Saputo, or the final weighted average of the farm gate milk price published by the two largest processors in the relevant region.
“Saputo recognises that in order to run efficient production facilities they need profitable dairy farms and a profitable industry, supported by strong milk prices,” Mr Mervis said.
With the $1.31 billion sale approved by shareholders, eligible Murray Goulburn suppliers can expect to begin receiving 80¢ per share or unit within 10 business days of the completion of the sale.
A further $114 million will be used to support the milk price, including a 40¢/kg milk solids step up for qualifying milk solids supplied from November 1, and, on completion of the asset sale, for qualifying milk solids supplied between July 1 and October 31 last year.
In a bid to keep suppliers, the deal will also see a 40¢/kg MS loyalty payment introduced for all eligible suppliers in the 2017–18 financial year which is expected to be paid on August 15.
As a result, the expected weighted average price for the southern milk region is estimated to be $6/kg MS for the current financial year, if the sale is completed.
Murray Goulburn chairman John Spark said final steps to liquidate the co-operative would take place following the completion of the sale.
“Once the transaction completes, MG will continue to exist and will hold certain non-operating assets and liabilities,” he said.
“A reduced board of five directors will manage the retained litigation and MG’s ongoing reporting and compliance obligations.”
Gippsland dairy farmers Kelvin Jackson and Bill Bodman, Koroit dairy farmer Harper Kilpatrick, Cobden dairy farmer Craig Dwyer, and Mark Clark will depart the board of directors, with directors Lisa Dwyer, Ian Goodin, David Gran, Brock Williams and Mr Spark staying on.
The co-operative will ultimately be completely liquidated, with proceeds returned to shareholders and unitholders.