Murray-Goulburn chief apologises to suppliers over dairy farm profit blunder

Murray-Goulburn’s chief executive  Ari Mervis has apologised to dairy farmers for saying that the opening farm gate price from the processor would make their operations profitable.

Murray-Goulburn announced this week  it's opening milk price for next season  would be $4.70/kilogram MS. The prices will be paid from July.

In a statement sent to suppliers late on Wednesday, Mr Mervis said : "In one of my interviews yesterday, I also implied the cost of production is below $4.70/kg MS on all farms."

"My words were poorly selected and did not reflect the fact that each dairy farming business is unique. I'd like to apologise for any offence caused by these comments," he added.

The apology followed comments on ABC radio that he had a “holistic view at the cost of production (it's) come down quite significantly over the last year. The price of grain has come down and the affordability of feed has reduced. In many instances the opening price should be well above the cost of production," he told the program.

Mr Mervis has been in charge of the troubled processor for just four months.

Dairy Connect’s Shaughn Morgan said it was a sign Mr Mervis should surround himself with better advisors.

“Farmers want to be paid enough to make sure they can pay their bills when they fall due,”  Mr Morgan said. “Dairy Connect urges Murray-Goulburn to pay a price to suppliers that enables them to continue in the industry. We must ensure that the farmgate price is not below the cost of production.”

Gloucester dairy farmer and Dairy Connect farmer president Graham Forbes  said he was surprised at Mr Mervis’s comments as $4.70/kg MS was well below what was being offered in New Zealand at about $6.50/kg MS. Mr Forbes supplies to Norco.

“I think his comments are right out of line and he shouldn’t be bringing feed costs and other inputs into the equation. I was quite surprised.”

Mr Forbes said Norco this week had dropped its prices by about one cent a litre for the first six months. The payment system was quite complex on the North Coast with suppliers producing everything from A2 to organic milk. Generally the price would be about $7/kg MS, but there were large costs in producing milk all year round, Mr Forbes said.

“I’d say at what Murray-Goulburn has offered that is discounting the market.”