QUESTION: Saputa intentions for Murray Goulburn

Mr PURCELL (Western Victoria) — My question is to Minister Pulford representing the Minister for Industry and Employment. For decades Victorian industry has been pillaged by overseas companies which have benefited from government funding and subsidies in their home country. Saputo, a Canadian dairy company, has grown and flourished where dairy farmers have a great deal of protection in relation to the farm gate milk price, but Saputo are now seeking to expand their empire into Australia by taking over Murray Goulburn and through exploiting our less regulated markets where they can pay farmers as little as possible.

Therefore I ask the minister: what is the government doing to protect the long-term future of companies and jobs in this state against predators that flourish through protection and subsidies in their home markets?

Ms Pulford — On a point of order, President, the question from Mr Purcell was directed to the Minister for Industry and Employment. I am the minister with primary carriage of the issues around Saputo and Murray Goulburn, so is Mr Purcell happy for me to answer in part as the Minister for Regional Development and in part as the Minister for Agriculture?

Mr PURCELL — I am more than happy for the minister to reply.

Ms PULFORD (Minister for Agriculture)  — I thank Mr Purcell for his question and his interest in what is an incredibly important issue for many regional Victorian communities and for our dairy industry. The fact that Murray Goulburn has been experiencing significant challenges is well-known and understood. There have been a series of inquiries over 18 months. The Australian Competition and Consumer Commission and the Australian Securities and Investments Commission have undertaken inquiries to understand the root cause of some of the decisions that have been made at Murray Goulburn.

Farmers and their communities have been impacted by dramatic price shocks, and the price of production for many farmers has been exceeding the price that they have been paid by processing companies. Particularly Murray Goulburn for a time but also Fonterra and some of the smaller players in our industry — still significant but smaller compared to those two — were able to maintain milk farm gate prices just above the cost of production.

But the dairy communities in the south-west in Mr Purcell’s own region, in northern Victoria and indeed throughout Gippsland have all been very significantly impacted. The government has been monitoring the situation closely. The federal government have undertaken investigations through their agencies and have also been engaged in that respect.

Murray Goulburn recently moved from a particular phase of their board’s attempt to resolve the instability that the company was experiencing into another phase, with the announcement of the sale to Saputo of operating assets and operating liabilities in the order of $1.3 billion — very significant. The transaction came about because Murray Goulburn had been experiencing significant commercial pressures. Their inability to maintain a competitive milk price had meant that they had lost around 40 per cent of milk supply. This was in turn having consequences in dairy factories, with the announced closure of the Kiewa plant and the Rochester plant. The closure of the plant at Kiewa has been put on hold for now since the announcement about the proposed sale to Saputo. There is another plant, a third plant in northern Tasmania, which was also declared for closure.

Murray Goulburn, just to give members a sense of the scale of their problems, experienced a loss after tax of $370 million for 2016–17. The lack of confidence that farmers have had in Murray Goulburn, particularly in their ability to provide a competitive farm gate milk price, has compounded their troubles, which were already significant. The board at Murray Goulburn has made a decision to put to shareholder members the proposed sale, and 50 per cent of those shareholder members will need to agree for that to go ahead. Certainly a commercial transaction was and remains our government’s preferred approach through this for Murray Goulburn, and some of the matters that Mr Purcell went to —