MURRAY Goulburn believes it must expand to be competitive. SIMONE SMITH reports
Stephen O'Rourke is keen to talk about Devondale.
The retail brand of co-operative Murray Goulburn plays a significant role in the dairy giant's $700 million domestic retail and food services business.
It has also been a stand-out during what has been a tumultuous 12 months for commodity prices.
So it is little wonder Murray Goulburn's managing director is keen to sing Devondale's praises.
"There is no question, this year, 2009-10, the year the world market has crashed, the return from the Devondale business has been significantly better than the return we have had out of the ingredients business," Mr O'Rourke said.
"But it is not always the case."
Devondale also provides the co-operative with an immediate opportunity to improve its return, by expanding the brand internationally and offering a larger range of products, according to Mr O'Rourke.
He is keen to develop the brand that provides a stable return to the co-operative and he wants to do that by increasing the amount of milk going into branded consumer packs.
Murray Goulburn uses 255 million litres of its milk intake for drinking milk, with its UHT business accounting for 200 million litres of this.
"About five years ago, about 10 per cent of our business was in retail. It is now 25 per cent, so we are pleased with the development, but we want to take it further," Mr O'Rourke said.
"We think that percentage needs to be higher.
"We think the perfect mix between the two should have us expanding our consumer retail business a bit more than where we are currently at."
This is one of the ways Murray Goulburn plans to "smooth out the price for farmers" amid international price volatility.
The co-operative's most talked-about move this year has been its failed attempts to win the support of the Warrnambool Cheese and Butter board in recommending Murray Goulburn's offers for takeover to its shareholders.
The idea of combining the two milk processors has the dairy industry divided.
Sceptics have labelled the co-operative's move a grab for milk, following production losses in the north.
Mr O'Rourke admitted securing extra milk was part of the plan, but said the bigger picture was about growth. He urged critics to try and understand the motives of its proposal.
"If we want to be competitive in the future, we have to compete against the big multinationals, not just in Australia, but all over the world," he said. "If our farmers want to compete, we believe strongly that they need a strong farmer-owned company, or co-operative, in this country in order to compete and get the best return for themselves.
"It's two good companies coming together to make a better one; it's about the future."
Although Murray Goulburn views the Western District as a region that has the potential to increase milk production, it remains optimistic about the north, with hopes that farmers can expand their businesses again and others can start up.
Mr O'Rourke clarified Murray Goulburn's position on the future of its "moth-balled" Leitchville cheese processing facility.
"There's no firm decision made yet into what we will do with the site," he said.
"I have never received an offer to acquire Leitchville."
Looking ahead, Mr O'Rourke said there was a chance of "modest improvement" in the farmgate milk price, however, this depended on currency and commodity prices.
Asked if Murray Goulburn's farmgate milk prices would open next season where they closed this season, he said there was a "chance of that", before adding that "any forecast has to be conditional on the fact that the market has proved (itself) to change very quickly in recent times".
