Letters to the editor - March 9

March 9 2018 - 3:30pm
Letters to the Editor – March 9
Letters to the Editor – March 9

Milk transport benefits

We already have three dairy factories operating in south-west Victoria; Warrnambool Cheese and Butter, Murray Goulburn and Fonterra. The three factories have not provided any great benefits to farmers in the way of competition. I see benefits in the Saputo and Murray Goulburn deal. Over the years, one of the regular suggestions in the industry is rationalising transport. This deal would rationalise transport. Under the current arrangements Murray Goulburn draws milk from as far as Colac to Koroit and Warrnambool Cheese and Butter from South Australia to Allansford. If a merger were to take place this would also rationalise transport, and eliminate milk travelling through Warrnambool as milk east of Warrnambool can be sent to the Allansford site and milk west of Warrnambool to the Koroit site. This will also ease congestion at the nine sets of traffic lights in Warrnambool from milk tankers. Fonterra already has two plants in south-west Victoria (Cobden and Dennington) and able to have these transport efficiencies. Why are Saputo being denied this benefit?  We also have New Zealand with one major company operating which, they claim, give them efficiencies of scale. This would be another benefit should Saputo be able to retain Koroit. As I understand it Warrnambool Cheese and Butter has past environmental issues and are operating above full capacity, having Koroit which is currently approximately one third capacity. The acquisition would relieve pressure on WCB and environmental factors also. There is also no guarantee that whoever would purchase Koroit would have access to the milk supply. My concern is whoever purchases Koroit may find they have a factory without more than one third supply. I believe that Saputo is the only one who can guarantee supply to Koroit as they have surplus milk that can be placed into this site. I have a concern about the guaranteed loyalty payment to Murray Goulbourn suppliers. Would they have to forfeit this money if Koroit has to be forfeited? How would this impact the value of their shares? Would the Koroit shareholders end up with a smaller payment/portion due to the difference in their circumstances? The majority of farmers affected want this deal completed as soon as possible as they have dealt with enough uncertainty and financial blows to their businesses.

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