Australia's biggest dairy processor is facing legal action from the ACCC over 'false' promises to farmers

Photo by Phil Walter/Getty Images

Murray Goulburn, Australia’s largest dairy processor, now faces legal action by the ACCC (Australian Competition and Consumer Commission) over broken promises it made dairy farmers about what they would be paid for their milk.

In the Federal Court, the consumer watchdog alleges the cooperative engaged in unconscionable conduct and made false or misleading representations in contravention of Australian Consumer Law.

The ACCC alleges that former managing director Gary Helou and former chief financial officer Bradley Hingle were knowingly concerned in Murray Goulburn’s conduct.

The allegations relate to representations made by Murray Goulburn to its Southern Milk Region dairy farmers between June 2015 and April 2016 about the average farmgate milk price it expected to pay them during the financial year.

The farmgate milk price is a weighted average paid to dairy farmers in Victoria, South Australia and southern New South Wales.

“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,” says ACCC chairman Rod Sims.

“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 says Murray Goulburn “misled” farmers by representing that it had a reasonable basis for setting and maintaining an opening price of $5.60 per kilogram of milk solids and a forecast final price of $6.05.

The cooperative later announced it would pay only $4.75 a kilogram because of falling global prices and unfavourable foreign exchange rates.

“Many farmers are in a relatively vulnerable trading position, and rely on transparent pricing information in order to budget effectively and make informed business decisions,” says Sims.

“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.”

Separately, the ACCC has decided not to take further action against Fonterra Australia over its step-down of its farmgate milk price announced one week after Murray Goulburn’s revised final price in April 2016.

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