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MG pledge to scrap clawback will help rebuild dairy industry trust

THE United Dairyfarmers of Victoria (UDV) has welcomed the announcement by Murray Goulburn this week to scrap its Milk Supply Support Package as a huge step forward in rebuilding trust and confidence between farmers and the processor.

The dairy co-operative said in a statement to the ASX that “future repayments of the MSSP which were to recommence from July 2017 will cease” and that it would “also make a payment to continuing and retired suppliers who made MSSP contributions between July and September 2016, and to any suppliers who recommence supplying milk to MG by 31 July 2017”.

UDV President Adam Jenkins said the move could have the effect of enticing back farmers who had abandoned the dairy co-operative in the wake of last year’s milk crisis.

“It’s clear that Murray Goulburn is putting farmers first and farmers can now feel like they’re an important part of this business,” Mr Jenkins said.

MG as a co-operative is still very important to the dairy industry and now farmers have genuine hope that things will change.
Adam Jenkins, President, United Dairyfarmers of Victoria

Mr Jenkins said it was clear Murray Goulburn was going through a transition and needed to make some changes, but that offering a competitive milk price next season should be the next step in restoring trust with its suppliers.

"From a dairy farmer and industry point of view, we need to support whatever things they need to put in place to make sure they're the right sized business," he said.

The processor also announced the closure of three processing plants at Kiewa, Edith Creek and Rochester, which Mr Jenkins said would have flow-on effects to the communities, but was necessary to keep the co-operative sustainable.

“Murray Goulburn needs to take a sensible approach to rebuilding, and that includes reviewing its entire cost structure,” he said.

"Understandably, this is a difficult period for the affected communities because the closure of a factory does really impact a town significantly. But at the same time, if they don't rationalise their factories, farmers' long-term viability to supply is at risk."

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