I have said this all along, this hybrid company structure won't...

First 257 Last

Share
Profile

Follow
aparbery

53 Posts.

1

30/06/16

20:58

Post #: 18165012
Share

Originally posted by Amused observer ↑

OK, generic arguments of industry at large or international trade is one thing but this is specific to the nuances in the diary industry in-country.

My view is the following things need to occur in the immediate term and these don't redress the industry at large but certainly put it on some form of footing to allow it to survive and thrive or fail on its own merit.

Currently the contrived (or artificial structures akin to semi-regulation) things in place that should be removed by the ACCC is MGC-GDT-Bonlac Agreement as it distorts the FGMP across the country given it is the two largest dairy processors in Australia that are party to that arrangement and everyone else falls in behind, for the most part. So it essentially is collusive behaviour, conscious or otherwise.

MGC specifically needs to get its act together together in terms of what it wants to be, either a servant to its supplier or a servant to its investors. Currently trying to serve both where the margins for its product (i.e. whatever it produces from the raw milk it gets not the raw milk in itself) cant support it. So to redress it MGC needs to either go back to being a pure co-op or step through to being fully corporatised and possibly listed. Either way the current Board needs to be replaced and some key executive roles refurbished.

Thats for starters in my view.

Expand

I have said this all along, this hybrid company structure won't work. Until something globally significant happens to dairy commodity prices, dairy processors will have to put their profits back into their respective companies. There is not enough cash in these businesses to pay much of a dividend and certainly no room for corporate mistakes.

MGC Price at posting: $1.09 Sentiment: Hold Disclosure: Not Held
Upvote

0 Great analysis

Reply