Shattered Victorian dairy farmers facing ruin after Murray Goulburn cuts milk price

VICTORIAN dairy farmers are being urged to “keep an eye on your neighbour” after Australia’s biggest milk processor cut the price it pays them by 10 per cent.

Australia’s biggest milk processor has cut the price it pays by 10 per cent.

VICTORIAN dairy farmers are being urged to “keep an eye on your neighbour” after Australia’s biggest milk processor cut the price it pays them by 10 per cent.

It comes as many dairy farmers are considering leaving the industry in the wake of Murray Goulburn’s decision, according to producers.

Farmer Andrew Leahy, a Murray Goulburn supplier in northern Victoria, said this week’s bombshell announcement would cost him $150,000 in the next two months alone.

He said the move would force him to renegotiate with fertiliser and hay suppliers and the banks.

“The message from me is: keep an eye on your neighbour and keep an eye on yourself,” Mr Leahy said.

“It’s probably just sinking in at the moment ... People will start thinking what’s really going to happen over the next couple of days. We are putting in place some strategies to try and help people. There was a lot of stress out there.”

Mr Leahy said Murray Goulburn needed to offer more explanation after its shock price cut and the resignation of chief executive Gary Helou.

“Farmers are devastated. They feel betrayed a little bit, lied to a little bit.”

Murray Goulburn suppliers will now be paid between $4.75 and $5 a kilogram for milk solids just two months after the company said it would maintain this season’s farmgate price at $5.60.

Former Murray Goulburn supplier Marian McDonald, of Fish Creek in South Gippsland, said for some it was the last straw. “I think it’s a case of people going through what it does mean for them and coming up with a new plan,” she said.

“They were already budgeting for the worst price, with the idea that $5.60 was the worst case scenario, now we’re talking about them ending up at $4.75 to $5. It’s a big difference.

“In northern Victoria, people will have locked in water at high prices thinking there would be a certain milk price to support that, and that milk price isn’t going to support that now, so that’s going to be really difficult for those people.”

Rabobank analyst Michael Harvey said it was a big confidence hit for farmers already struggling with a lack of water. “(This) drop in the milk price puts it into a difficult situation,” he said.

Late yesterday, law firm Slater & Gordon was sizing up a class action against Murray Goulburn investigating whether it misled the share market over its bullish profit forecasts.

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