MURRAY Goulburn’s $300 million Koroit expansion is in doubt.
Seven months after announcing plans for an infant formula milk powder plant at the site, the dairy giant is exploring other options with Laverton a potential better location.
In a letter to suppliers, chief executive David Mallinson said MG was “revisiting all… capital projects” in an effort to ensure “the most appropriate and cost effective location”.
“At this stage no final decision has been made,” he said.
“It is important to note that Koroit remains a critical centre for our operations and this review will not impact our current activities or workforce.”
The revelation comes after it spent more than $2 million buying a number of houses in nearby Mill Street to maintain a buffer zone around the factory. An associated packaging company plant was also mooted for the site.
MG has repeatedly maintained the development would go ahead but the indecision comes as it confirmed a loss of more than 300 million litres of milk last season and 240 of its 2400 suppliers.
The number of farmers ending their supply to the co-operative could be more because the data released related to meetings in July and August.
Sources say the the dairy industry leader has lost closer to 85 suppliers and 15 per cent production from Koroit alone, with more farmers planning to follow in protest at its shock milk price cuts and retrospective claw backs in May, sparking an industry crisis.
A MG spokesman said some dryers at Koroit had been closed due to the lower output from the plant. He said there had been no permanent job losses at the site.
“Milk volumes go up and down across the season and we manage through,” he said.
“We have sufficient milk supply at Koroit to meet all our retail commitments.”
Moyne Shire councillor Jim Doukas said in March the expansion was a great outcome for the community, attracting up to 100 jobs, ensuring road and rail upgrades and enticing more suppliers.
“If they’re looking at other sites, they should take a step back and realise their best long-term option is Koroit,” he said on Monday.
“They need to be concentrating on keeping supply in Koroit. It’s their best factory.
“Koroit has the best year-round milk supply and it’s good quality, it’s located in a strategic position.”
Cr Doukas said the development would boost the whole dairying region.
“The benefits would be terrific,” he said.