DAIRY farmers are unlikely to get better returns for their milk even if there is a takeover of Warrnambool Cheese and Butter.
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It was not what struggling farmers wanted to hear at a United Dairyfarmers of Victoria (UDV)-convened meeting in Warrnambool on Monday night where the future of the industry and WCB, subject of a three-way takeover bid, was discussed.
The meeting, which attracted more than 250 people, ended with a clear message for WCB shareholders — don’t sell to Canadian firm Saputo.
READ MORE: Saputo closes in on WCB
But industry analyst Jon Hauser from consultant firm Xcheque poured cold water on hopes a change of ownership — either Saputo or Australian co-operatives Murray Goulburn or Bega, could result in more cash for farmers.
“If you get milk prices in the high 40 cents a litre you will not have an industry,” Dr Hauser said.
He said a milk price of 50 cents a litre would not allow the dairy industry to grow.
“Do not expect we can go past the milk price of other world dairy producers,” Dr Hauser said. “We need to build an industry that is better. Then we can grow.”
Ellerslie dairy farmer Paul Madden said the industry would not grow if the farm gate milk price was 30 cents a litre.
He was concerned that a takeover of WCB would reduce competition for milk and reduce prices.
“Who is going to keep everyone honest?” Mr Madden asked. “Costs of production are way out of control. We need milk prices in the high 40c a litre.”
But Mr Hauser said if farmers wanted to influence milk prices, they needed to have control over the industry supply chain and be part of a co-operative. He said rejecting the Saputo offer was a “no brainer” despite the firm offering the top price of $8 for each WCB share.
Australian Dairy Farmers president Noel Campbell said a significant co-operative was needed in any dairy producing country to tackle the export market.
WCB supplier John McDonald of Terang put an alternative view, saying the offer from the Canadian-based Saputo company “sounded exciting” while the Australian bidders, the Murray Goulburn and Bega co-operatives, offered “the same tired leadership”.
“We cannot survive with more of the same,” Mr McDonald said.
Murray Goulburn chairman Philip Tracy told the meeting the WCB takeover bids had created “a poignant time in the industry”.
“Farmers have to make a decision about the structure of the industry going forward.” The fragmented structure of the Australian dairy industry had not enabled the industry to grow, Mr Tracy said.
He took heart that most farmers at the meeting believed co-operatives were the way to take the industry forward.
UDV vice-president Tyran Jones told the meeting the Australian dairy industry needed to better focus on world markets.
He said the growth of the industry depended not on better farm gate competition but on creating an industry that was internationally competitive.
Gippsland dairy farmer Bernard Lucas said many dairy farmers faced the biggest financial choice in their lives with their decision on the WCB takeover bids.
Mr Lucas said the dairy industry needed to rationalise to take on the world. “Our opposition is New Zealand, we have to fight against them,” he said.
ehimmelreich@fairfaxmedia.com.au
