No one says they aren't hurting, but lets not dramatize this too much. They are losing 2% of their expected milk return for this year - and losing a further 3-5% for the next 3 years.
Few points.
1. This milk crisis has made it seem as if farmers are losing 50% of their milk price, where instead its only 2% for this year !!
2. MGC may be able to minimize the 3-5% in the next three years if they deliver on their higher revenue dairy products
3. Also lets not forget - consumers are now going out there buying BRANDED milk, and farmers will also benefit from this.
4. Farmers will not take any debt! the co-op is. Farmers will not be impacted at all except from a slightly lower milk price in the next few years.
I personally dont get all the fuss. Yes I'm sorry the world is not giving $6 milk right now, but MGC is trying its hardest to get it as high as possible. Yes they messed up by predicting a $5.60 milk price, but the impact of their MESS up is felt by INVESTORS who have lost 60% of their $500m. Not farmers who take on NO DEBT, got their shares at $1(where we are today).. oh they lose 3-5% of their revenue over the next 5 years? big deal.
AS STATED, if MGC deliver with the $500m they received and are investing in value add products then the farmers will be much better off. Investors who got in at the IPO of $2.10... will however, take a long time to recoup.
bottom line - lets not over dramatize the situation. Murray goulburn is in fine shape and will OUTPERFORM the general milk market through their value added products and scale.
MGC Price at posting:
$1.01 Sentiment: Buy Disclosure: Held
