A milk factory expansion worth up to $300 million is unlikely to go ahead at Koroit without financial assistance, Murray Goulburn says.
Interim chief executive David Mallinson revealed on Friday that funding from both state and federal governments held the key to the development of a new infant formula and nutritional powders plan in the town.
“I’ll be really blunt,” he said. “My emotional preference is Koroit but from a commercial perspective, it’s not.”
Mr Mallinson attended a business workshop meeting in Warrnambool to connect with the region and personally address questions from the rural community.
He said infrastructure surrounding its existing Koroit factory was a major roadblock in its expansion plans.
“Wannon Water can’t take the effluent, which will mean a $30 million expenditure for Murray Goulburn and to improve power will cost $20 million,” Mr Mallinson said.
“It’s Koroit versus Melbourne. If we spend $50 million of shareholder money, we must get that back.”
He said the cooperative was talking with state and federal governments about potential solutions.
“The government have to be reasonable,” he said. “Effluent (infrastructure) benefits the entire community… not just Murray Goulburn.”
He said the company’s focus was on reducing the cost base to benefit farmers.
“The problem is (the cost to develop in Koroit) could make us less competitive,” Mr Mallinson said. “Therefore farmers end up paying.”
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