Open letter to Murray Goulburn Co-operative Co. Limited:
Farmers’ finances are at breaking point. Why are we paying out an interim dividend when there is no real need, before paying out the last two remaining step-ups that are still budgeted for?
Why are you choosing to take money away from milk price?
If the step-ups no longer exist, then tell us.
We shouldn’t need to live with false hope, but making us wait till the end of the season is brutal in the current seasonal and financial conditions.
The dividend has nothing to do with our milk price and should never be factored in to it, or be a part of our final milk price.
It is merely a return on our money that we have lent to MG, pure and simple.
The dividend, when paid, is spread inequitably amongst farmers, those that are significantly over shared take a disproportionate amount of the money and the available cash flow, especially when the paying of an interim dividend is completely at the discretion of the board and could wait.
Farmers, both emotionally and financially, have now been stretched to breaking point.
I do not see why they are the ones that have to take so much of the burden of the downturns when they occur.
It must now be shifted beyond the farm gate and the company must take a hit as well.
The MG balance sheet has never been stronger; with the support of its bankers it has to take a hit to its bottom line and make a manageable loss and pay the last two step-ups now.
MG has done this before and it needs to be done again now.
It cannot nor should it be just be about new products, state of the art factories, new contracts and big new corporate offices.
At times plans need to change to deal with the here and now.
The lack of communication from the board is disappointing in the current climate.
Mr Chairman, I am also growing tired of the company always espousing the constant rhetoric that we are getting paid the highest, or second, or third highest milk price ever, when it bears no relationship with the real cost of production set against the average final farm gate milk price, a price that very few farmers actually receive.
And suggesting at the AGM that farmers are in a strong financial position to ride out the current down turn (and dare I say drought) because of previous so-called high milk prices disappoints me greatly.
Right now the regional farm suppliers to dairy farmers are closing down lines of credit, for accounts for as little as $600 and 60 days overdue, and indicate that unless you settle your account it will be cash only.
In my time I have not seen this occur to this extent this early on, which must tell us something about the current financial stress levels out there for both farmers and merchants.
MG takes great pride in saying it sets the Australian milk price and the others must follow.
Now is the time to really step up, for you or should I say we, to support our dairy farmers.
Or have the directors fallen so much in love with the dream that they choose to ignore the current reality that farmers are dealing with.
Or don’t the new unit trust arrangements where all profit must be paid out as a dividend leave any flexibility to support farmers in a down turn as we have done in the past.
That’s my view on the current situation. I have no idea how many farmers may or may not support or agree with this view but I feel MG needs to do more regarding the current situation.
Bernhard Lubitz, Long term MG supplier, Leongatha North.