Dairy farmers in Victoria’s south-west have welcomed the purchase of Murray Goulburn’s former Koroit processing plant by Bega Cheese.
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Bega Cheese will buy the plant, which produces butter and milk powders, from Canadian dairy giant Saputo Dairy Australia, for $250 million.
SDA was forced to divest Koroit after the Australian Competition and Consumer Commission believed its retention would stifle competition.
Bega Cheese chief executive officer Paul van Heerwaarden said Koroit would provide Bega with “a significant presence in western Victoria and operational flexibility with our other milk processing sites”.
“Importantly the acquisition will support the continued growth of our core dairy business and provide domestic and export customers with an expanded range of products,” Mr van Heerwaarden said.
As part of the sale, Bega Cheese is guaranteed the plant’s current milk supply of 300 million litres, until June 30, 2020.
Bega has been collecting milk in western Victoria for almost 10 years.
United Dairyfarmers of Victoria Wannon branch vice president Casey Taylor said he personally thought the sale was “fantastic”.
“We have a company coming into the district with a well proven track record,” Mr Taylor said.
He said he’d spoken with other farmers in the area who were “rapt” with the idea.
“It probably gives farmers in the outer areas, into the lower south-east of South Australia, a bit more confidence,” he said.
“Bega has been collecting milk in the western districts and I would see them going a lot further for milk than what they currently are.”
Winslow dairy farmer Bernie Free said the sale was the best option from the potential buyers he had heard about.
He said Bega seemed to be a progressive company but would need to secure milk supply.
“You do the sums – there is not enough milk in Victoria, to supply all the factories,” Mr Free said.
“I don’t think it will harm the dairy industry and it will possibly be positive for it.”
Timboon farmer Nick Renyard said farmers would be familiar with Bega’s culture.
Bega currently picked up milk from between 70 and 80 suppliers in the region.
“They are going to want to fill that factory,” Mr Renyard said.
The supply agreement would give Bega a chance to stand on its own feet.
“I would think they are probably going to want to be pretty competitive,” he said.
“But it’s quite a lot of supply they will have to sign up,” Mr Renyard said.
