Volatile pricing threatens investment.
While he considers spending upwards of $900 million to ensure that JB Hi Fi doesn’t acquire The Good Guys business, Gerry Harvey (pictured below) has warned the government against imposing a consumer levy on milk sales to help the nation’s dairy farmers suffering from falling milk prices.
Harvey speaks from a position of authority following his September 2016, purchase of a 49.9 % stake in Goulburn Valley dairy farm, Coomboona Holdings for $34 million. Coomboona Holdings is one of Australia’s largest dairy farms.
Harvey Norman has made several investments in unrelated businesses, including mining camps and property.
Harvey maintains that people getting into the dairy industry must understand it was highly vulnerable to swings in commodity prices and that while the current crisis was of great concern, it could ultimately create a more lean and smaller sector that would benefit from an eventual upturn in farmgate milk prices.
“The thing about this is it’s a commodity and commodities go up and down in price, so you have to look at that when you are in commodities and if you are in there for a short play or a long play, you have to know that when you go into it,’’ Harvey told The Australian on the weekend.
“You are going to have ups and downs and when it’s up everybody is happy, when it goes down generally a lot of people go out of the business, so the next time it goes up the ones that are left benefit a bit more.’’
The crashing milk price has triggered shock waves through farming ranks, with some dairy producers facing massive losses or financial ruin.
“The milk price is not as good as we hoped it would be, but the price we are getting is still OK,’’ Harvey said.
“We are not happy with it but if I knew I was going to get the price I’m getting now going forward, for the next couple of years, I wouldn’t be happy, but we wouldn’t be devastated,” he added.