North East dairy farmers and Cobram Murray Goulburn employees are both anxiously awaiting the full impact of its multi-million Woolworths contract loss.
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While the full extent of the company losing the tender to supply dairy to several companies is unknown, North East producers are concerned.
Reeling from a cut in milk solid prices last month, King Valley diary farmer Rob Cook said it was a small proportion of production but “anything counts”.
“Any loss of sales locally is going to have an impact, but how much we don’t know – it all depends on what the profit margin was and how much they sell,” he said.
A spokeswoman maintained a $130 million deal with Coles, which starts in February, would offset any losses but said there would be “an impact” on Cobram factory operations.
Moira mayor Gary Cleveland admitted it was a “watch and wait” situation.
“It’s been difficult … with what’s happened in the milk industry, it’s just another obstacle put in front of us before we can move forwards,” he said.
“We’ll be looking at what happens for a whole range of people – it’s not just the employment, it’s the spin offs to other fields and industries that will be affected.”
Long-serving Murray Goulburn director Ken Jones downplayed the consequences of Woolworths’ decision.
When asked how farmers would not be affected by the loss, he said it created opportunities to sell the products to other customers.
The Kergunyah dairy farmer, who’s served as deputy chairman since 2011, said the milk market was going through a challenging time.
“When private label contracts go to tender everybody puts a tender in expecting, if they get the contract, to apply returns to the supplier, to our producers – that’s basically what it amounts to,” he said.
“Sometimes you win, sometimes you lose.
“The critical thing is we can sell products that return profitable returns to our producers, that’s always the critical part of what we need to do as a business.”
Murray Goulburn claimed existing contracts would minimise the financial impact this year and it would adjust future planning to focus on other markets.
Chief executive David Mallison said the tender to keep the contract was competitive while “balancing acceptable returns” for its products.