Corrs Chambers Westgarth has advised Murray Goulburn Co-operative Co. Limited (Devondale) to secure a landmark 10 year milk supply agreement with Coles that will deliver a better return for farmers.

Murray Goulburn is Australia’s largest dairy farmer co-operative with over 2,400 farmer-shareholders. The agreement is valued at over more than $2 billion and will see Murray Goulburn supply Coles with daily pasteurised milk for its Coles store-brand private label in Victoria and NSW from July 2014.

Under the ground-breaking 10 year deal, the milk price paid by Coles locks in a premium unaffected by international price fluctuations, with rise and fall provisions to protect local farmers.

The agreement also strengthens the footprint of Australian dairy farmers in the daily pasteurised milk segment which is currently supplied primarily by foreign owned processors.

Separately, the deal will allow Murray Goulburn to relaunch Devondale branded milk through an initially exclusive agreement with Coles; and Devondale cheese will be returned to Coles’ shelves.

To deliver on the agreement, Murray Goulburn will now invest approximately $120 million in the construction of two state-of-the-art milk processing plants in Melbourne and Sydney. This is the most significant investment in dairy processing technology since the deregulation of the dairy industry in 2000.

Corrs’ construction and planning teams will continue to work with Murray Goulburn during the development of its new facilities. Central to the project will be Hugh Watson and Joe Barbaro (construction) and Nathaniel Popelianski and Eleanor Kwak (property).

David Hallam said “It has been a privilege to be involved in such a significant transaction for our client, Murray Goulburn and its farmer members. In the context of the recent heightened focus on the supply of milk in Australia, this is an enormously important and high profile deal. It also signifies a material expansion by our client, one of the last remaining Australian co-operatives, into fresh milk processing. We look forward to working further with Murray Goulburn ahead during the construction and development of its two new state-of-the-art processing facilities.

The content of this publication is for reference purposes only. It is current at the date of publication. This content does not constitute legal advice and should not be relied upon as such. Legal advice about your specific circumstances should always be obtained before taking any action based on this publication.