Murray Goulburn Co-op sheds jobs: why it’s happening

The co-op we supply, Murray Goulburn, has made an announcement that immediately made me sad. In an email sent to its farmers yesterday, managing director Gary Helou, wrote:

“The change program embarked on by MG is even more critical given increasing cost pressure and the recent significant decline in world market prices due to higher global milk supply. This initiative will help reduce the impact of falling world prices and a high Australian dollar on our supplier/shareholders. As a result of these changes, MG’s total workforce is set to reduce by 12% or 301 roles.”

While it makes me sad, I’m not surprised. Farmers are struggling to survive (less water, increasing costs, horrible prices and now the carbon tax slug estimated to cost us $7,500 each) and milk flows have dropped as a result. When appointed as the new CEO a few months ago, Mr Helou announced he would cut the co-op’s operating costs by a whopping 25%. That’s a lot of money.

As he went on to write in yesterday’s email:

“We continue to employ more than 2,100 people, mostly in rural and regional Australia, and contribute an estimated $6 billion to the Australian economy. These changes will make a significant contribution to our goal of reducing operating costs by $100 million this year and set us on the path to becoming a world leader in dairy foods”.

To give you some background, MG is Australia’s last big dairy farmer co-operative and processes around 35% of the country’s milk. You can’t own shares in MG unless you supply the co-op milk, so all the profits go straight back to farmers. The other big players are privately owned and profit from buying milk at the lowest possible price and selling it at the highest possible price. In effect, this means that MG tends to set the benchmark for the price dairy farmers like me are paid for their milk.

This is why I feel torn about the “change program”. On one hand, I am worried that somewhere along the way, we will weaken MG’s co-op values but, on the other, we desperately need MG to be strong and efficient. Neither the 2,100 MG workforce or Australia’s dairy farmers can afford to lose this gentle giant. Please be careful, Mr Helou, and good luck.

3 Comments

Filed under Community, Murray Goulburn

3 responses to “Murray Goulburn Co-op sheds jobs: why it’s happening

  1. Jim Lamb

    Smells like a stock-market listing for the “gentle giant”. Don’t let it happen, farmers own old Mud Guts and that’s how it should stay. List and MG will just be an asset which will be sold “in the interests of share holders” -BS. More accurately to fan someone’s ego. Remember Ampol ?

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    • I’ve also heard some speculation that MG is prime for a sell-off. I’m not sure sure. I think that now, more than ever before, dairy farmers are acutely aware of the need for a large farmer-owned co-op.

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  2. simon trinca

    If dairy farmers think they are going to be better off by allowing corporate vultures to introduce a serious conflict of interest, that will eventually leave them with nothing, they deserve what they get. Illusory short term gain and very real long term loss and loss of control of their business.
    Look what happened to Graincorp. The “Golden” share that was meant to preserve grower control was useless. Growers are now pawns in a global trading game designed to minimise returns to growers and maximise returns to shareholders, often foreign.
    Co-ops exist to serve local growers, Corporates exist to enrich global shareholders who will eventually turn growers into a serf class.
    Sunrice growers were smart, Graincorp growers were dumb. MG??
    Growers should ask themselves why Lazard, Macquarie and Mr Helou are so keen on of this deal and demand to know what they get out of it.

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