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Category: Dairy Production / Agribusiness / Food Processing / Food and Beverage

MG chairman stands by decisions leading up to price cuts

Tuesday, 16 Aug 2016 09:51:00 | Clint Jasper

Murray Goulburn chair Philip Tracy blames the co-ops woes on a failure to predict a downturn in sales for adult milk powder.

Murray Goulburn chairman Philip Tracy denies the company should have warned its suppliers earlier that its price forecasts would not be met.

Speaking to ABC Rural about revelations in Monday night's Four Corners episode, Mr Tracey said the embattled dairy processors' board has reviewed all of it public disclosures and stands by each of them.

He maintained the change in market conditions meant the company was forced to slash the price it paid its suppliers, sparking a crisis in the Australian dairy industry.

"In August 2015, we described in our financial results declining sales of food ingredients, we were also pointing to a closing price between $5.60 to $5.90 per kilogram of milk solids, because commodity prices were declining."

Mr Tracey maintained the company went into a trading halt as soon as the board realised the sales of higher-value food products were not off setting losses made on the international commodity market.

It will come as cold comfort for angry Murray Goulburn dairy farmers, some of which have decided to leave the co-op since it issued the retrospective price cut, a move that caused many farmers to owe MG upwards of $100,000 each.

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The former managing director Gary Helou was saying just two weeks before the price cut that in fact a $6 per kilogram of milk solids was achievable.

"Our obligation as directors is to act as soon as we know about new information," Mr Tracy said.

"That's exactly what we did."

Despite repeated claims the company stands by every one of its previous public disclosures, Mr Tracy did shift some of the blame onto a Chinese government's short-lived tax on imported food products in an interview with the Victorian Country Hour on Tuesday.

Philip Tracy:

"That had an impact which restricted imports to products that were on [the positive list], and that had an impact which turned out to be more significant than we initially thought."

Victorian Country Hour's Nikolai Beilharz:

"But you did say at the time that it was not going to have a material impact on the business."

Philip Tracy

"Yeah, and we still do not believe it will not in the long term, but in the short term it did have a more significant impact than we thought at the time."

Mr Tracy said the retrospective price cut had been misinterpreted by many, saying with the support package the net impact of suppliers up to June 30, 2016 will be less than one cent a litre.

"In the current year, with the current opening milk price the economics are very, very difficult and all of us are going to be faced with tough decisions."

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