Murray Goulburn has shocked the share market today by announcing it will close three factories and “forgive” the MSSP. The news may be just as important for Fonterra suppliers as its own.
While Fonterra deliberates on how it will respond, I thought I’d repost this Q&A from November, which makes very interesting reading in light of today’s announcement.
The trump card held by Fonterra milk recruiters has long been a promise to match or better the price offered by Victoria’s biggest processor. What could possibly go wrong?
Indeed, the so-called “Bonlac Milk Supply Agency Agreement” has worked well for a long time. But it all unraveled last season when the biggest processor, Murray Goulburn Co-operative, started to behave at odds with the deteriorating global price.
Aunty MG, which had always worn a demure twin set and behaved with utter decorum, pawned the family silver, took off in a turbo-charged red convertible driven at break-neck speed by the sweet-talking new boy in town while tossing money at admirers like confetti. Fonterra was dragged along, screaming for Aunty to slow the hell down but nonetheless tethered to the rear bumper.
The wreckage of the crash has been messy for all involved. The Bonlac Supply Company chairman, Tony Marwood, writes in…
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The Milk Maid Marian 
I think the shock to the stock market may have been more about forgiveness of the debt, than the closure of factories Marian. The forgiveness of debt is just another decision flying in the face of another class of owners
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I suspect so, too, John. Would not be popular with investors already uncertain about not having control over their investment.
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