I HAVE had many people say they can’t understand how a company can ask for money back when a producer has a contract and supply price.
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This is a very good question, and one that is difficult to understand, because I don’t believe it has ever happened before, either in the livestock industry, or anywhere else for that matter.
Basically, dairy farmers had contracts for a price per kilogram, butter fat for this year.
Murray Goulburn have since re-assessed their situation, and have dramatically lowered the money offered.
However, they have made that price change retrospective and told their suppliers they have to pay back the difference from that date forward till now.
All farmers will feel the pinch, and while some in a good position for grass and supplementary feed, may withstand the big drop in price, but with their milk cheque adjusted, monthly, by Murray Goulburn, until this payback is complete, it will severely deplete payments to an unacceptable amount.
Many farmers will struggle to pay their suppliers, local produce stores, grain suppliers etc, and many of these suppliers are already telling of many accounts outside the usual 30 day trading terms.
Some are exceeding 90 days, and some suppliers are not delivering, or issuing stock until outstanding debts are paid.
As this situation compounds many local businesses will feel the pinch as farmers wives have to spend less in their community.
School exertions, lunches, clothes etc, could be cut back, as could travel to sport, etc.
This may sound extreme, but altogether possible.
Already, there have been some farmers giving up and selling their whole herd for slaughter, not wanting to have the grief of turning up each morning and afternoon, and milking cows that will give them a negative return.
This is alright if you don’t have any, or much debt to clear with Murray Goulburn, or anybody else for that matter.
And all of this is okay if you have a plan for the future.
But what if you want to enter the beef industry?
Current price trends do not allow for an easy entrance here either.
What will happen to Murray Goulburn if this does become a class action by farmers?
What will happen to Murray Goulburn’s directors if this becomes a big legal issue?
Right or wrong, most of the directors are dairy farmers, so what will happen if they are held to account by the court or the ACCC?
