Murray Goulburn collapse: Counting the cost of the 2016 clawback
Five years on from dairy price collapse, farmers such as Ron Guyett have found a silver lining in the Murray Goulburn clawback cloud.
Carrying his eight-month-old grandson Kade, Ron Guyett summed up the mood of shell-shocked Murray Goulburn suppliers.
“Kade is the seventh generation directly or indirectly dairy farming,” the Naringal farmer told The Weekly Times in May 2016.
“I would not wish dairying upon him. Not in a million years. I think he would be better off on a board of directors somewhere. I think a lot of people will go to the wall because of this.”
Mr Guyett was not alone in his grim assessment on the state of the dairy sector.
More than 400 farmers packed the Camperdown Football clubrooms, the first time they’d assembled in the one place since the phrase “clawback” had unceremoniously entered their lives. Next Tuesday marks five years since that word entered the dairy lexicon.
The MG suppliers turned out to hear from representatives of the company, which the previous week announced it would cut the farmgate milk price by 15 per cent, with farmers forced to pay back money for the next three years.
The Camperdown scene was part of the grim clawback theatre that played out across Victoria’s three dairying regions — southwest Victoria, northern Victoria and Gippsland — as well as interstate.
“We are depressed going in and we will be depressed going out,” one bloke said as he walked through the clubroom double doors.
Soon after Murray Goulburn announced its price cut to farmers, Fonterra cut its farmgate figures even further, spreading the pain across the whole industry.
Many were forced to leave the sector. In fact, a quarter of all Victoria’s dairy farmers have decided they were better off out of the milking pit during the past five years.
But not Mr Guyett.
While some ex-Murray Goulburn suppliers went on to its successor Saputo, others like Mr Guyett opted for new pastures.
He supplied Union Dairy Company for a time and is now with Australian Consolidated Milk.
“ACM have been a great fit for us. We’ve been really happy with the way they operate,” he said. “No doubt, it was a terrible time for the industry. But ultimately, there’ve been a lot of positives to follow.
“The industry had been deluded by the dreams pushed at a higher level that didn’t reflect reality.”
Established in 1950, Murray Goulburn started off like many dairy co-operatives in the post-war years — a symbol of pride in their home region.
By the mid-1980s, MG was out of the Goulburn Valley and on to the national food stage.
Once its golden anniversary was marked in 2000, it had well and truly become Australia’s leading dairy processor.
With this corporate heft came a growing sense of invincibility. In early 2010 and again in 2013, MG made a bid to take over Warrnambool Cheese and Butter.
Leading the charge was swash-buckling MG managing director Gary Helou.
“When you combine (WCB) with a bigger unit like Murray Goulburn you are going to have a very big economic unit that has real export orientation,” Mr Helou said in 2013.
The former SunRice boss was proven right — MG and WCB did enter a union. But it was Saputo who officiated at the corporate wedding.
Mr Helou did not respond to calls for comment by The Weekly Times.
The former managing director has been a reclusive figure since the collapse, batting away questions from Four Corners when he was approached outside what the current affairs program described as his “comfortable estate outside Sydney.”
“I can’t, I already told you, I can’t talk about Murray Goulburn. There are investigations going, there are issues,” Mr Helou told Four Corners in 2016.
While Mr Helou is consigned to dairy’s history books (and the occasional Federal Court report), the scars created by MG and other processors are yet to fully heal.
United Dairyfarmers of Victoria president Paul Mumford said successor company Saputo, Fonterra and other processors needed to work harder to regain farmer trust.
“We’ve had the mandatory code of conduct, which has helped the farmer-processor relationship, but more needs to be done,” Mr Mumford said.
“The processors need to work harder to restore trust. We’ve had a great season but dairy farmers are still leaving the sector.”
Dairy Farmer Voice spokesman Bernie Free said Fonterra and Saputo had not fully learnt the mistakes of 2016, with an approach of “talking down” to farmers continuing.
“In the lead up to Christmas, I know of farmers in the Warrnambool region that were deciding to get out while the going was good,” the southwest Victorian farmer said.
“They wanted to leave while they’d got their debt under control or felt there was some stability in dairy. The clawback has created long-lasting damage.”
Many farmers The Weekly Times spoke to wanted to tell their stories anonymously, still scarred by the 2016 clawback.
One Gippsland farmer left the sector shortly after the clawback.
“Why would you want to stay in dairy? It’s pretty clear what the processors think of the farmers — just a cash cow. That’s probably the right word for it — although no farmer would treat their cows the way MG treated its suppliers.”
Fast forward five years, Kade, once the babe in arms, is now starting school.
Mr Guyett said the Australian dairy sector needs further change to make it fit for future generations.
“There’s a lot of sense in what (former Woolworths chairman) John Dahlsen is advocating through the Dahlsen plan. Coles and Woolworths have had a drought levy that’s lasted past the drought, consumers have been fine with it,” Mr Guyett said.
“There have been some positives to the industry in recent years that may not have happened had there not been that dramatic change with the clawback and the end of Murray Goulburn. “We’ve got new players in the market; there’s more competition that there once was.”
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