SYDNEY Dec 12 The new chief executive of
Australia's largest dairy processor Murray Goulburn
said on Monday his first priority will be to restore the trust
of the cooperative's farmers angered by a late cut to milk
Murray Goulburn on Monday named brewing executive Ari Mervis
as its CEO, replacing Greg Helou who stepped down in April amid
a surprise profit downgrade just nine months after a sharemarket
listing that added non-voting shares to voting shares held by
The co-operative's relationship with its farmers soured in
April after it slashed the price it paid to suppliers by as much
as 20 percent after a slump in global milk prices due to
The cuts surprised and angered farmers, who said it came so
late in the season that they had little chance to react.
Should dairy farmers reduce milk production or sell to other
processors, Murray Goulburn could find it hard to source milk
for products such as infant formula for international markets.
"The important thing is to restore the supplier base and
supplier confidence," Mervis, who will join in February, told
"Trust is earned, it is not commanded. Over time, once they
have that confidence, things will begin to improve."
He said it was too early to comment on the group's broader
Under its former CEO, Murray Goulburn sought to export
high-value products such as nutritional dairy items to countries
like China. But soft demand and above market costs for their
milk supplies forced the company to more than halve its profit
outlook to A$39 million ($29 million).
Murray Goulburn chairman Philip Tracy said the company had
good brand value in China, which would stand it in good stead.
However, Mervis will face a difficult global dairy market,
amid ample global supplies and sluggish demand.
A regulatory change on infant milk formula imports in China
is also leading some suppliers to dump stock at heavy discounts,
temporarily depressing the market.
Murray Goulburn shares were trading down 2.7 percent on
Monday at A$0.91, a more than six-month low.
($1 = 1.3416 Australian dollars)
(Reporting by Colin Packham; Editing by Richard Pullin)