Support for Bega to buy Koroit

02 Jul, 2018 12:00 PM
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Speculation is mounting that Bega Cheese is set to buy the former Murray Goulburn Koroit plant.
Bega Cheese had also paid an 'overall competitive price most years'.
Speculation is mounting that Bega Cheese is set to buy the former Murray Goulburn Koroit plant.

Leading dairy industry bodies say the reported sale of Murray Goulburn’s Koroit factory to Bega Cheese would be good for south-west Victorian dairy farmers.

Speculation is mounting that Bega Cheese is set to buy the company from Canadian dairy giant Saputo, which owns MG, but both Bega Cheese and MG have declined to comment.

Victorian dairy industry consultant John Mulvaney said Bega Cheese had a more equitable and transparent milk payment structure than the other major milk processors.

Mr Mulvaney, who has researched milk payment structures for the United Dairyfarmers of Victoria, said Bega Cheese’s milk payment structure allowed its suppliers to more easily compare the prices they received with those of other Bega Cheese suppliers.

“Bega Cheese has the narrowest price range between its suppliers of any major milk company in western Victoria,” Mr Mulvaney said.

“Saputo is yet to make any substantial changes to what is a complex payment system.”

Mr Mulvaney said Bega Cheese had also paid an “overall competitive price most years”.

“They have also not been guilty of the sort of behaviour seen from Fonterra and MG in recent years,” he said.

Both MG and Fonterra slashed their milk prices in early 2016, provoking an outcry and a big switch of MG suppliers to other processors that led to MG’s sale to Saputo.

Mr Mulvaney said another factor in Bega Cheese’s favour was that it was Australian-owned.

He said he expected Bega Cheese would work to retain the suppliers currently supplying the Koroit factory.

Bega Cheese executive chairman Barry Irvin said early last year the company was only drawing about 100 million litres of milk from western Victoria, which it trucked to Coburg.

The publicly-listed Bega Cheese has expanded in recent years, last year buying most of Mondelez International’s Australian and New Zealand grocery and cheese business including the iconic Vegemite brand.

In 2013 it made an unsuccessful bid for Warrnambool Cheese and Butter.

United Dairyfarmers of Victoria president Adam Jenkins said if Bega Cheese bought the Koroit factory, it would be an “excellent fit and provide excellent competition” for south-west dairy producers.

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