The Australian Competition and Consumer Commission (ACCC) is taking legal action against milk processor Murray Goulburn, alleging it misled farmers about farmgate milk prices.
The ACCC alleges that from June 2015 until February 2016, MG misled farmers when it set an opening farmgate price (the amount it pays farmers) of $5.60 kgms and a forecast final farmgate price of $6.05/kgms, and that it considered the forecast Final FMP of $6.05/kgms was the most likely outcome for FY16, when that was not the case.
Further, the ACCC alleges that from February 2016 until April 2016, Murray Goulburn misled farmers by representing it had a reasonable basis for expecting to be able to maintain its opening farmgate of $5.60/kgms for the remainder of the season, and that it considered a Final FMP of $5.60/kgms was the most likely outcome for FY16, when that was not in fact the case.
The company’s subsequent decision to retrospectively cut the farmgate price left many farmers in financial trouble.
“The ACCC alleges that Murray Goulburn’s conduct had an adverse impact on many farmers who, as a result of Murray Goulburn’s representations regarding the farmgate milk price, had made business decisions,” said ACCC Chairman Rod Sims.
“The farmers relied on Murray Goulburn’s representations and were not expecting a substantial reduction in the farmgate milk price, particularly so close to the end of the season when it was not possible for them to practically readjust their expenditure.”
As the ABC reports, Sims added that MG’s former managing director Gary Helou and former chief financial officer Bradley Hingle could face penalties as a result of the action.
“I don’t want to pre-empt the court proceedings. There could be multiple contraventions here and each contravention would have a penalty of up to $220,000 per breach,” he said.