Australia’s largest milk processor has made misleading representations in contravention of the Australian Consumer Law according to the Australian Competition and Consumer Commission (ACCC).
It was alleged that Murray Goulburn Cooperative Co. Limited (Murray Goulburn), along with former managing director Gary Helou and former chief financial officer Bradley Hingle are engaged in unconscionable conduct by misleading farmers with their opening farmgate milk pricing (FMP).
The FMP is the total amount of money the processor pays the farmers for their milk product, regardless of how that product is used ie drinking milk, yoghurt, milk powder.
ACCC chairman Rod Sims said the allegations related to representations made by Murray Goulburn to dairy farmers between June 2015 and April 2016.
“The ACCC alleges that Murray Goulburn’s conduct had an adverse impact on many farmers who, as a result of Murray Goulburn’s representations regarding the farmgate milk price, had made business decisions,” he said.
“The farmers relied on Murray Goulburn’s representations and were not expecting a substantial reduction in the farmgate milk price, particularly so close to the end of the season when it was not possible for them to practically readjust their expenditure.”
The ACCC said that from June 2015 until February 2016 that Murray Goulburn misled farmers by representing it’s basis for setting an opening FMP of $5.60 per kilogram of milk solids (kgms) and a forecast final FMP of $6.05/kgms.
It was further alleged that between February 2016 and April 2016 Murray Goulburn misled farmers by representing that it was able to maintain its opening FMP of $5.60/kgms and a final forecast of $5.60/kgms was the most likely outcome for the financial year of 2016.
The ACCC said in all circumstances Murray Goulburn’s conduct towards farmers was unconscionable.
Including that Murray Goulburn: knew farmers relied on opening FMP and forecast Final FMP to make business decisions during the financial year; were aware that many farmers were unable to easily switch milk processors; set an expectation that opening FMP would be set conservatively and would be minimum price, and final FMP would be higher; knew farmers expected an update to the forecast Final FMP regularly to reflect changes; provided and maintained FMP forecasts despite knowing that they were overstated and unachievable in FY16 and that farmers were making decisions in reliance on these forecasts.
Mr Sims said farmers were in a vulnerable trading position and relied on transparent pricing to effectively budget and make business decisions.
“In these circumstances, farmers were entitled to expect Murray Goulburn to have a reasonable basis for determining its pricing, and to regularly update farmers if there was any change in forecast prices,” he said.
The ACCC is seeking orders against Murray Goulburn including declarations, compliance program orders, corrective notices and costs.
The ACCC is also seeking declarations, pecuniary penalties, disqualification orders and costs from Mr Helou and Mr Hingle.