A new suite of support programs for suppliers has been announced by milk processor, Murray Goulburn.
Milk co-operative Murray Goulburn has announced major new support programs for its suppliers which it says are designed to help restructure the industry and support their dairy businesses.
The company has denied it is designed to only offer support to its suppliers while it cannot offer a better milk price.
Dubbed the ‘Next Generation’ package, the co-operative hopes it will support existing suppliers and help prospective new farmers and suppliers.
Exclusive to MG suppliers, the Next Generation package includes financial support, access to employment and immigration resources to address labour shortages, leasing partnerships to offer existing or new Murray Goulburn suppliers an alternative to bank debt, and medium and short-term finance to assist with cash flow management including upgrades to milk vats for improved efficiency.
Suppliers will also be able to open up longer-term credit lines at MG Trading stores for purchases such as seed, fodder and fertiliser.
General manager shareholder relations Robert Poole said MG had responded to calls from supplier shareholders to make a meaningful response to the challenges associated with young and new entrants establishing themselves in the industry, attracting an appropriate dairy workforce and removing obstacles to profitable farm businesses and farm succession.
He said Murray Goulburn had trialled the leasing arrangements on eight farms so far and was happy with the outcome.
‘‘While our primary focus is a higher farmgate milk price through cost leadership and innovation in the MG business, we recognise that there are times in a farm’s life that other forms of business support are needed,’’ Mr Poole said.
‘‘These periods are typically when dairy farmers enter the industry, experience tough business conditions or when a dairy business undertakes a rapid growth phase.’’
Mr Poole said the the Next Generation package built upon MG’s supplier-shareholder services, including working capital loans and milk payment advances.
‘‘The package is available to existing and prospective MG suppliers across all of Murray Goulburn supply regions.’’
Mr Poole said MG had designed the package around farm business opportunities and, in particular, increased milk supply, which will in turn bring mutually beneficial increased returns to farmers and MG.
He said taking into account expected returns from increased milk flow and other benefits, the investment would be self-funding.
‘‘It’s significant and it’s in the budget, but expect it to take care of itself.’’
Milk volume has been difficult to maintain for the big milk processors in recent years. Mr Poole said the northern region was up on last year although the Western District and Gippsland were facing a much tougher season.
Asked whether the package was just to compensate for the low milk price, Mr Poole said it was a more complex approach to the structure of the industry.
‘‘The labour market initiatives are not about price. If the price goes up, the labour problems will still be there.
‘‘If the prices had not fallen, we may still have carried out this program.’’
Mr Poole was optimistic about the future for dairy prices and noted a large price increase in the global dairy trade auctions last week.
He wouldn’t be drawn on specific price movements for the future but said Murray Goulburn was passing on step-ups to its suppliers as often as it could and had already suspended share contributions.
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