Atale of stupidity andincompetence

Comment By Stephen Dwyer

WITH the imminent closure of the once bustling Maffra Factory, we need to learn from the serious mistakes of the past and hope that we will have a future with more forward-thinking people.

Maffra Co-op was amillion-pound-a-year company by the 1950s. It had half the Macalister Irrigation District in its grasp,apart from apocket loyal to Nestlé. The other half of the dairy-rich MID was with Heyfield.

Amalgamations werethe rage andMurray Goulburn was in its infancy, and was little more than atin shed at Cobram.

Common sense said an amalgamation between Heyfield andMaffrawould provide apowerhouse. Its farmers were concentrated. Transport costs were at abare minimum.

Unfortunately common sense did not prevail. Personal animosity and the usual divide between Maffra andHeyfield in the Maffra Shire got in the wayofcommonsense.

With 'amalgamation to survive and grow' being the catch-cry, insteadHeyfield sought aunion with Glengarry and Gormandale; distant farmers without the reliability of irrigation.

Maffra threw its weight to the towns of Orbost and Cann River, forming Gippsland Consolidated Milk.

The resultwas acatastrophefor both companies.

Transport was akiller and the once-concentrated MID,with its concentration of dairy farmers making agreat livingout of its prosperousindustry, was now diluted.

Heyfieldand Maffraco-ops were nowgoing bust They combined to form Gippsland Amalgamated Milk Products. All it did was make asuper-broke company.

This co-op was ripe for the picking and was taken over and given alifeline by the still-growing Murray Goulburn Co-op (MG).

MG, with the genius of Jack McGuire at thehelm, knewnobounds. But on his retirement thingswent bad; it was on its knees when the then-chairman Bill Patersonannounced at small hallsaround the district that MG's price of 50 cents akilo was unsustainable, and it could pay as little 35 cents.

In astrokeofgenius, he brought back Jack McGuire from retirement, and with prudent decision-making, turned the company around.

We weren't so lucky when another managing director wreaked havoc after being paid in excess of 12 milliondollars. Gary Haloubrought the company to its knees withastrategy thatinvolved huge incentivestosome sales of milktosupermarkets, to be sold for $1 alitre anda floating of the company on the stock market.

Theday of the float,every co-op shareholder had his shareholding diluted by the number of new share issued. The milk price and value of milk in the public's eye has only recently returned.

Aboard designed to look after the interests of each region was secured.

Gippsland had four directors; it ended up as one from Maffra and three from Leongatha/Yarram.

The Maffra plant, with its dryersand agas supply second only to Sale,was put intoa holding pattern Leongatha, with afactory in the wrong partoftown surrounded by hills, was earmarked for expansion.

Millions were wasted on the ageing plant. With Gary Helou given free rein and disastrous decisionmaking by the board, MG was on adownward spiral. The result was the disaster of telling farmers to expect $6 akilo when the co-op was losing money.

Of course, this didn't affect the shareholders -they wouldstill get 17 cents dividendonevery share and MG would make apaper profit of $150 million.

Theycreated clawback to extract already-paid money from farmers with areduced milk price The board, of course, instead of fixing the problem, made it worse.

Men like former chairman, Ian McCauly, who knew the company and warned against the failed strategy, should have been embraced. Instead he was shunned.

The bleeding of suppliers to other companies became aflood. The board announceditwould sell to Saputo. There would be no other option.

Lino Saputo came and of course assured everyone thathewas not motivated by greed and money, but by his dear old granny who used to churn the butter churninthe old family house. He would keep all factories.

If only granny was alive today -wecould get her to set up her churninthe shell that is Saputo Maffra.

So nowthe MID, with its huge supply of dairy farms, has no factory.

There is aglimmer of hope -Burra leads the fieldonpricetofarmers,working out of the former non-needed and discarded MG Korumburra factory

Can we indeed learn from history?

Stephen Dwyer is aNewry dairy farmer