Saputo outcome

The Devondale Murray Goulburn plant in Smithton now under the ownership of Saputo Australia following the sale of the Murray Goulburn Co-operative to the Canadian company recently. Picture: Ashleigh Force.

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Dairy. Smithton’s Devondale Murray Goulburn factory is now in new hands with owner Saputo Dairy Australia announcing a retrospective farmgate milk price for the 2017-18 season.

This follows a decision by Murray Goulburn stakeholders for Saputo Australia to take on all of the operating assets and liabilities of the co-operative.

Mawbanna dairy farmer Matthew Gunningham says he has always supported the idea of supplying a local factory.

The Canadian based company acquired the Australian co-operative for $1.3 billion earlier this year on a debt-free basis, financed by a newly committed bank loan.

“I don’t think it will make any difference day to day initially,” he said of the sale.

“At this point, we don’t have any plans to make any drastic changes in our supplying but overall, for us it is a huge disappointment that Murray Goulburn has sold and is now outside of farmer ownership.

“A co-operative was formed in the first place because farmers needed ownership beyond the farmgate and an influence beyond the farmgate. We have been strong believers in having a stake outside the farmgate however it became clear over the last couple of years that MG had reached a point where it was unable to perform as an individual entity any longer – the outcome made sense.”

Saputo is among the leading dairy processors globally, producing cheese, milk, extended shelf-life milk and cream products, cultured products and dairy ingredients.

“We are pleased to see the uncertainly is now over,” Mr Gunningham said. “We have certainty again going forward.”

Saputo last week announced its average farmgate milk price for all suppliers, including existing Murray Goulburn suppliers, at $5.68 per kilogram of milk solids, up from $5.60.

The price will apply to milk supplied from July last year to April this year.

This announcement came the same day Fonterra Australia announced its fixed base milk price for the 2018-19 season. The price will be set to $5.90 per kilogram of milk solids following the conclusion of its annual tender process.

Fonterra’s Farm Source general manager Matt Watt says a fixed base milk price allows suppliers to lock in a price ahead of the season, and provides “greater price certainty by helping to reduce farmers’ exposure to market volatility”.

“Certainty can be particularly important for farmers at times when they are considering business investments such as expansion or undertaking a new conversion,” Mr Watt said.

“Fixed base milk price is a bit like having a fixed interest rate on your mortgage versus a floating rate. It enables you to know exactly where you stand with a percentage of your production and this can help with future planning and the ability to manage margins.

“It’s another tool we’re providing under our Farm Source, offering to deliver greater price certainty to farmers and so they can focus on running their own business.”

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