Future of dairy industry positive, MG claims

February 16, 2017

Murray Goulburn has released its submission to the ACCC's dairy industry inquiry.

An inquiry into the dairy industry has published a submission made by major processor Murray Goulburn.

The Australian Competition and Consumer Commission published the submission online last Wednesday, with MG saying it welcomed the opportunity to make a submission.

The submission said while MG realised the Australian dairy industry was significantly affected by global dairy commodity exchanges and foreign exchange rates, the future of the industry remained positive.

‘‘With growth in global demand for dairy products projected to outstrip supply into the medium to long-term future, particularly in Asia, the Australian dairy industry is well placed to supply, and benefit from, this increased demand,’’ the submission read.

In response to the ACCC Issues Paper, particularly around concerns of contracting practice and anti-competitive conduct or unfair trading practices, MG said it was actively participating in a range of ongoing industry-led discussions regarding contractual and pricing arrangements.

‘‘MG is committed to working with its farmer suppliers and industry groups to continue to improve upon milk supply arrangements where possible,’’ the submission read.

‘‘This has included meetings with farmers groups such as the United Dairyfarmers of Victoria (UDV) and the Australian Dairy Farmers (ADF), and also through MG’s attendance at the symposium chaired by the Deputy Prime Minister, the Honourable Barnaby Joyce MP, in August.’’

MG also addressed pricing concerns under the opening price/step-up model in its submission, as well as domestic and global markets and production costs and profitability.

‘‘As a co-operative, the mechanism of best delivering the distribution of payments from the milk pool will always be a topic for discussion and refinement,’’ it said.

‘‘The review (of milk price mechanisms, announced in October) will be conducted by MG in consultation with suppliers to determine whether the current approach to pricing remains fit for purpose amid ongoing volatility in commodity markets.

‘‘The board and management also support the proposed introduction of an Australian commodity milk price index as a way in which to further enhance pricing transparency across the dairy industry.

‘‘MG is well positioned to capitalise on the growth opportunities for dairy products globally.

‘‘Its strategy sees a focus on pursuing value-added dairy products (that is, achieving a premium above a commodity return for our products).

‘‘This is a strategy that continues to receive the support from MG’s supplier shareholders and unit investors.’’

●The full 22-page submission is available to read on Murray Goulburn’s website under the ‘news’ tab.

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