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The winners and losers in Australia’s dairy industry as Murray Goulburn sale looms


Stephen Coulston’s cows trudge back from the milking shed as the dawn mist rises from the lush pastures.

In the town of Tangambalanga, a stone’s throw across the paddocks, steam rises from Murray Goulburn’s dairy factory.

But the rich milk from these cows won’t be going to the local factory.

Instead, it will be trucked 200 kilometres away to a processing plant at Kyabram.

For decades Murray Goulburn was Australia’s largest dairy company, a farmer co-operative that had the lion’s share of the nation’s milk.

Now, collapsed under debt, Murray Goulburn is mortally wounded and destined to be sold up and dismantled while the future of its factory at Tamgambalanga, as elsewhere across Victoria, looks bleak.

That’s why Mr Coulston, the fourth generation of his family to supply the local factory, last year made the bold decision to send his milk to a rival firm.

“There was a lot of unrest there,” he said.

“And there was an opportunity with Kyvalley to supply the Kiewa milk again.”

A proud milk-producing region

Kiewa Country Milk had been a strong local brand for decades.

Processed and packaged at Tangambalanga, it was sold throughout northern Victoria and southern New South Wales.

But Murray Goulburn’s corporate collapse saw the end of the brand and its processing equipment sold off in a fire sale.

So, seeing the opportunity, Kyvalley Dairy Group in Victoria’s Goulburn Valley, now one of Australia’s largest dairy families, brothers Wayne, Peter and David Mulcahy jumped at the chance to buy a well-established milk brand.

“It’s an iconic brand, it started in 1893,” Peter Mulcahy said.

“A lot of people have put a lot of work into that factory and brand.”

Wayne Mulcahy said they thought the brand had “a strong presence, strong value, long heritage”.

The deal included flavoured milk and all of the recipes, intellectual property and processing plant from Tamgambalanga.

Saved from the brink

Now every drop of Mr Coulston’s milk — up to 14,000 litres a day — is sent to the Mulcahy’s Kyabram factory.

Mr Coulston was proud the local milk brand, saved from oblivion, is now back on the shelves.

But, like others in the industry, he lamented the loss of the farmer co-operative.

“It’s a shock. I think it’ll just go down in history as one of those really horrible things that have happened to the dairy industry,” he said.

Wayne Mulcahy agreed having a strong, large co-operative was a positive thing for the dairy industry.

“And we don’t have that anymore with Murray Goulburn going so it’ll be interesting to see what the future holds,” he said.

For Kyvally Dairy it means new market opportunities.

“The dislocation in the industry caused by the troubles that Murray Goulburn have gone through has presented a lot of opportunities, not just for us but for most of the other dairy companies,” Wayne Mulcahy said.

Murray Goulburn heading overseas

Murray Goulburn will almost certainly be sold to a foreign buyer.

Canadian dairy giant Saputo looks set to buy most of the components of the beleaguered company in coming months for a sale price of about $1.3 billion.

Murray Goulburn’s collapse was bitterly timed, coming during a period of weak demand and global oversupply of dairy products.

Now companies such as Kyvalley are enjoying a market upswing and voracious, unprecedented demand for dairy from Asia.

This year, the company expects to process and sell 70 million litres of fresh milk.

Half of it will be sent to Singapore, Malaysia and China. By 2020 the company is aiming to reach 100 million litres.

Mr Coulston had no qualms about putting certainty over sentiment and leaving the local factory.

“I’m really happy and I couldn’t speak highly enough of the way the Mulcahys run their business,” he said.

 

Source: ABC


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