Cutbacks at Australian dairy group

By Boyd Champness

ONE of Australias largest dairy groups, the Victorian-based Bonlac Foods, announced last week that it was closing four plants and shedding at least 300 jobs throughout the state in an effort to reduce its overheads.

The closures, expected to cost the company $A34 million (13m) in write-offs and redundancies, are the first part of an extensive plan to cut overheads by 30% so the company can increase payments to its dairy farmer shareholders.

Bonlac chairman Bill Hill told The Age newspaper last week that Bonlac paid its dairy farmer shareholders between $A50 million and $A60 million less than its chief competitor in the state, Murray-Goulburn Cooperative, which translated to around $A20,000 (7500) less for each farmer.

Bonlac has abandoned its plans to merge with New South Wales Dairy Farmers but will sell a quarter of itself to the New Zealand Dairy Board.

Bonlacs chief executive officer Alex Sloan said “the reality is that today we have 13 production sites compared with only five operated by a similar-sized cooperative,” implying that more closures may be in store.

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