Fonterra bid has farmers guessing

South-west Murray Goulburn suppliers are waiting for more detail on a bid by Fonterra before making a decision.
South-west Murray Goulburn suppliers are waiting for more detail on a bid by Fonterra before making a decision.

United Dairyfarmers of Victoria (UDV) president Adam Jenkins says he’s keeping an open mind about Fonterra’s bid for Murray Goulburn (MG).

Mr Jenkins, of South Purrumbete, said the UDV would look at whether Fonterra’s bid would provide both economic and strong “moral” value to lift Australia’s dairy industry into profitability.

“It’s not about the best price,” he said.

“It’s about someone who can drive our industry and take it forward,” Mr Jenkins said.

“It’s not about coming to the dairy industry and paying the most exorbitant price but not contributing,” he said. 

He said cooperatives such as MG were very important to the dairy industry but they had to be well run to deliver good returns to their farmer shareholders.

“MG has not done that in the last 18 months,” Mr Jenkins said.

But he said the Victorian dairy industry had been built on cooperatives such as MG and the cooperative philosophy of collaborative joint ventures was still very important to the industry.

Fonterra has released few details about the proposal it has put to MG apart from saying it had “made an indicative, non-binding proposal to MG, which is now with the MG board for their consideration.”

A Fonterra spokesperson said the company “would not be discussing details of our proposal publicly – MG’s board and its shareholders are entitled to have time to consider what we have proposed.” 

MG supplier Craig Dettling, of Macarthur, said that with very little detail, it was hard to comment on Fonterra’s announcement.

But Mr Dettling said it was important that farmer cooperatives such as MG remained in the industry so farmer suppliers had some control over the prices they were paid.

However he said Fonterra’s proposal could involve merging MG with Fonterra New Zealand, another cooperative, which would allow MG to remain a cooperative.

Another MG supplier, Brian McLaren, of Woolsthorpe, said if the proposal did involve a bid by Fonterra to buy out MG, he doubted it would get the 90 per cent support needed from MG shareholders.

Mr McLaren said many suppliers, including himself, had stuck with MG despite the low milk prices it was paying because they wanted a cooperative to remain in the market.

“But if they are going to merge it, it would be different again,” he said.

“It’s pie in the sky without the details,” Mr McLaren said.

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