Concerns over Murray Goulburn sale

Mr PURCELL (Western Victoria) (12:06:50) — My question is for the Minister for Agriculture, and it is in regard to the sale of Murray Goulburn to Saputo. Last week the Australian Competition and Consumer Commission (ACCC) announced that it had concerns over the inclusion of the Koroit plant in the asset sale and the effect that this sale would have on the competition for raw milk in western Victoria. The worst result for dairy farmers in the south-west would be if either the current Saputo plant at Allansford or the Murray Goulburn plant at Koroit were sold to a dairy minnow to appease the ACCC's concerns. If this happens, the minnow will quickly be smashed by the international giants, Fonterra or Saputo, leading to the exact duopoly situation that the ACCC is trying to avoid but with severe consequences for the community and dairy farmers. My question is: Minister, have you had or do you intend to have discussions with the ACCC to make certain that the dairy farmers in western Victoria are protected from this sale?

Ms PULFORD (Minister for Agriculture) (12:07:46) — I thank Mr Purcell for his question on this very important matter and for his interest in the issues that underlie the work that the ACCC is currently undertaking with Saputo as it seeks to advance its proposed purchase of Murray Goulburn, a $1.3 billion transaction. The ACCC has identified issues in relation to the proposed sale, in particular on the question of competition in the south-west. This comes about because Saputo's existing operations in Victoria are in Warrnambool, not all that far from Koroit at all. So the Saputo purchase of Murray Goulburn's entire operations nationally would certainly pose a risk to competition in the south-west, and that is something that the ACCC has flagged. It has indicated that it will make a final decision by the end of April.

In recent days, as I imagine Mr Purcell is well and truly aware, Saputo has lodged a proposed undertaking with the ACCC on the divestment of Koroit, and I, like Mr Purcell, share concerns that there be appropriate levels of competition in the market and that this exists in each of our three dairy regions. In this instance it is an issue that is confined to the south-west, but certainly the question of strong competition for farmgate milk price is a really important one for our dairy farmers.

I have not spoken to the ACCC. I have spoken to the former federal minister for agriculture about these issues, and the Treasurer has also spoken to his federal counterpart, who is the minister responsible for the ACCC. That was a little while ago now; it was at the time that this was first announced and first flagged. I believe the ACCC and Saputo have been working through this in the months since then. I am certainly more than happy to work with Mr Purcell to ensure that the concerns that he is raising are conveyed to the new federal Minister for Agriculture and Water Resources, David Littleproud, if that would be of some assistance.

Mr PURCELL (Western Victoria) (12:10:41) — I thank the minister for her response. The thing with the ACCC is that Saputo have actually said that they are in discussions in regard to the issue with Murray Goulburn. They have not said that they are looking to divest Murray Goulburn, Koroit. My belief is that they will actually purchase all of Murray Goulburn, including Koroit, and divest elements of that, because the Murray Goulburn Koroit factory is much more efficient. Either way, in regard to these factories that are 25 to 30 kilometres apart the issue is that at some stage it may well get to the situation that if it is sold to them, one of these factories will actually close. So I ask: what guarantees can you offer small towns in regard to employment if such a thing did happen to either of those factories?

Ms PULFORD (Minister for Agriculture) (12:11:40) — I thank Mr Purcell for his further question. My advice on this, and this has been moving reasonably quickly in recent days, is that Saputo have lodged a proposal with the ACCC about divesting Koroit. There are some media reports today that suggest that there is actually quite a lot of interest in purchasing that plant by some significant and established players in the market, so I am not immediately concerned about the risk of either of the plants in the south-west closing. The quality of milk production is excellent, the quality of the workforce is excellent and there would appear to be quite some interest in the purchase of Koroit in the event that divestment is something that comes about as a result of the work that Saputo are doing with the ACCC. But certainly I can assure Mr Purcell that our efforts to support job creation and the retention of jobs in every part of regional Victoria, including in the south-west, are great, that our record is strong and that we will provide every assurance that it will continue to be so.


Murray Goulburn says Saputo still has to buy Koroit

CORRECTING AND UPDATING : Murray Goulburn (MG) has said Canadian dairy giant Saputo still has to buy its Koroit plant even though the Australian Consumer and Competition Commission (ACCC) has concerns the purchase might reduce competition for milk from south-west dairy farmers.


Saputo flags dropping Koroit from Murray Goulburn bid|Update

UPDATE : Murray Goulburn (MG) supplier Craig Dettling says Saputo's announcement that it will consider excluding MG's Koroit plant from its proposal to buy the rest of MG is likely to cause more anxiety for MG suppliers.