Dairy farmers say they may have no choice but to leave the industry following Murray Goulburn’s decision to cut the price it pays them for milk.
Murray Goulburn’s decision came on Wednesday as the dairy co-operative cut its estimate of net profit after tax to between $39 million and $42 million and its chief executive Gary Helou resigned.
As the ABC reports, Victorian framer Andrew Leahy was not expecting the price cut and does not believe all in the industry will be able to handle it.
“It’s just unprecedented. The main impact will be people just won’t be able to afford to do it and probably start selling cows, and there will be some more dairy farm businesses shaken out of the system,” Leahy told the ABC.
“I think we’ll lose a lot of the northern Victorian dairy farmers.
“We’ll have to really really tighten our belts and we’ll have to do it even again. I don’t know how tight you can go. The future of our family farm is in jeopardy.”
According to the SMH, Units in Murray Goulburn’s ASX-listed trust dropped 42 per cent to $1.24 following Wednesday’s news.
There could be more bad news ahead for the co-operative. As the Australian reports, the dramatic drop in profit estimate may be looked at by the corporate regulator.
Originally, in its prospectus, Murray Goulburn had forecast a profit of $89 million. Then in February it lowered that figure to $63 million. And now the figure stands at $39 million and $42 million.
While the Australian Securities & Investments Commission (ASIC) has not yet investigated this large drop, it well may do so in the near future.
Murray Goulburn chairman Philip Tracy claimed no investigation is necessary.
“Ultimately we reflect on the processes. There was nothing we could have done any quicker,’’ Tracy told The Australian. “With everything we had in front of us we were comfortable with the forecast we made at that time in the prospectus.’’