Murray Goulburn ’s chief executive officer has apologised after suggesting the opening price the co-operative announced last week would cover the cost of production for dairy farms.
Ari Mervis was asked on Tuesday whether the opening price of $4.70/kg of milk solids was below the cost of production.
‘‘In many instances the opening price should be well above the cost of production,’’ he said.
Mr Mervis’ comments came the same week as Dairy Australia’s Dairy Situation and Outlook report for June, which said feed prices in the Goulburn and Murray valleys had reduced by 20 per cent for stockfeed wheat and 50 per cent for shedded hay.
‘‘If one has a holistic look at the cost of production, they’ve come down quite significantly over the last year, given the price of grain has come down and hence the affordability of feed has been reduced,’’ Mr Mervis said in Tuesday’s interview.
Some Murray Goulburn suppliers expressed frustration at the comments and others praised him for acknowledging an error and apologising.
‘‘He’s got that all wrong because cost of production is not that,’’ Invergordon farmer and Murray Goulburn supplier Mark Norman said.
‘‘We need mid-to-high 5s ($5/kg MS) to survive — $4.70 is too low. The thing is that our dollar is not in a bad position at all,’’ he said.
‘‘He knows he’s stuffed up, he’s acknowledged he’s stuffed up, I’m hoping there is no more sweeping comments like that again,’’ Strathmerton farmer Andrew Wilson said.
Another Murray Goulburn supplier, Di Bowles from Mead, in Victoria’s north-west, was asked whether the opening price was enough to cover the cost of production and her response was a definitive ‘‘no’’.
‘‘I must admit I was a little surprised to hear (Mr Mervis say) that we can make money at that price, but we can’t,’’ she said.
‘‘I do find it disappointing (that Mr Mervis said that) I don’t know where they’ve got that information from.
‘‘I have heard people saying we need $6 or $6.50 to make money, I can make money off a bit less than that but most definitely more than $4.70.’’
According to the 2015-16 Dairy Farm Monitor Report, in fact the average cost of production for farmers in northern Victoria was $6.18/kg MS and the top performing farmers were making a profit at $5.53/kg for milk solids.
Mr Mervis sent a letter to suppliers to apologise, saying that his comments ‘‘were poorly selected and did not reflect the fact that each dairy farming business is unique’’.
■Murray Goulburn may allow the Rochester factory site to be sold once it has transferred required plant from the site.
Mr Mervis told Country News they would not be moth-balling the site, in response to questions from the community about whether the factory would be unavailable for other uses once it closes next year.