Supplier Handbook - Home - Devondale Murray …

1 Supplier HandbookSouthern milk Region 2017/18 SPINE WIDTH TBAS ummary of key changes in the 2017/18 Supplier HandbookThe following table outlines certain key changes and updates that have been made to the 2017/18 Supplier Handbook . Please read this document to ensure you are aware of any changes that may affect your milk Supply CoveredBrief Description of Change1 dairy Regions and processing plantsPreviously located in separate Section 2 ( dairy regions and processing plant), now incorporated in Section Registrar and Shareholder Trading Platform, Share OfftakeFurther information regarding services provided by Computershare and Bell Direct for MG shareholders. Suppliers who are below their share standard may opt-out of the share offtake program for FY17/18 , and IncentiveGrowth Incentive , and *Flat milk IncentiveFMI Election requirement and FMI deduction amounts removed.

2 FMI percentage bands expanded. Eligible suppliers may take a portion of their FMI as an early , , and ProgramInclusion of Reward * milk Support Package (MSSP)Removed from of milk cooling target requirements (after occurrence of a vat breakdown or power failure) Grade Penalty SystemClarification that MG may cease milk collection where a Supplier s rolling 12-month grades reach 12 in any category (Bactoscan, Thermoduric or Bulk milk Cell Count) Room RequirementsUpdated Supplier vat room Control MeasuresDamaged or broken asbestos in vat room to be reported for risk assessment prior to further milk collection8 Standard milk Payment Terms various amendmentsSupplier may supply excess milk to other persons (in certain circumstances). Farm classifications, early termination payments removed. Supplier confidentiality, termination and assignment rights incorporated.

3 Supplier with Current Fixed Term Supply Commitment may terminate within 30 days of any price reduction after 1 January. Notice details updated to allow for fax and email communications. Dispute process incorporated*deleted (previously clause or in 2016/17 Supplier Handbook )Unless otherwise stated, terms used in this Handbook have the meaning given to them in Section 8, Standard milk Payment TermsContentsAbout Murray Goulburn Co-operative Co. Limited Our story Our business segments and product mix dairy regions and processing plants 4 Supplier services and support Field Services Share equity Regular updates Income estimates Next Generation package Field Services contacts 9MG Trading MG Trading service offering MG Trading locations and trading hours 12 milk payment system explained Overview of milk payment system Incentives Reward Program Tipped milk payment milk handling charges Minimum pick-ups Discounts Murray Goulburn vat standard Murray Goulburn milk

4 Vat financing standard Statutory and other levies 21 Farm milk quality standard milk quality commitment milk quality standards Sampling procedure milk rejection Bactoscan and Thermoduric testing Bulk milk Cell Count (BMCC) testing Impact of export requirements on MG s raw milk collection Inhibitory substances/residues Temperature Vat breakdown or power failure Colostrum Rolling grade penalties system milk quality reports MG Quality Solutions programs 30 Food safety and quality assurance program MG Milkcare On-farm audits milk quality standards and regulations MG FarmC@re Animal welfare Position on Genetic Modification (GM)

5 34 milk collection and on-farm requirements Farm track and dairy access On-farm safety Accessing your property Requirements for tanker access Access track design Vat room requirements Vat room asbestos control measures Issue resolution process 40 Standard milk Payment Terms 2017/18 41 Summary information 42 Murray Goulburn Standard milk Payment Terms (Terms) 42123456781 Murray GOULBURN CO-OPERATIVE CO. LIMITED Supplier HANDBOOKA bout Murray Goulburn Co-operative Co. Limited1In this Our Our business segments and product dairy regions and processing plantsMURRAY GOULBURN CO-OPERATIVE CO. LIMITED Supplier HANDBOOK2 ABOUT Murray GOULBURN CO-OPERATIVE CO. LIMITEDOur storyIn 1950, a group of 14 dairy farmers formed the MG Co-operative to seek a better deal for their milk .

6 Today, MG is Australia s largest dairy foods company and co-operative of Australian farmers, processing over one-third of Australia s milk supply. We are 100 percent controlled by over 2,000 dairy farmer s Southern milk Region encompasses suppliers located in the dairy regions of Victoria, NSW (Southern Riverina), South Australia and, since July 2015, Tasmania. In 2013, MG also commenced milk collection in the Sydney region. The arrangements relating to the supply of milk in the NSW Sydney Market Region are set out in a separate Supplier strong Murray Goulburn is of fundamental importance to the Australian dairy industry. Our focus is to ensure the ongoing competitiveness of our business now and into the business segments and product mixDairy FoodsOur dairy Foods business segment encompasses all consumer and food service sales, in both domestic and international business supplies large retail grocery chains and food service distributors with dairy foods such as dairy beverages (chilled and UHT milk ), cheese, butter, cream and consumer milk and NutritionalsOur Ingredients and Nutritionals business is a globally recognised Supplier of bulk and customised dairy ingredients and infant nutrition products to the key markets of North Asia, South East Asia, Australia, Sri Lanka and the USA.

7 With a long established presence as Australia s leading dairy Supplier , MG s Ingredients and Nutritionals products are well known and trusted in the global also operate a number of wholly owned businesses and subsidiaries. These include MG Trading, a commercial milk broking business, ProviCo and a number of joint our history, we have built an enviable reputation as Australia s leading producer of quality dairy foods, including the Devondale and Liddells Food Service division also supplies quality dairy products to organisations around Australia. Our products are available in, for example, government and educational institutions, restaurants, cafes, the airline and hospitality GOULBURN CO-OPERATIVE CO. LIMITED Supplier HANDBOOKABOUT Murray GOULBURN CO-OPERATIVE CO. LIMITEDD airy regions and processing plantsHobartSydneyNSWSAVICTASA delaideMelbourneROCHESTER*KOROITLAVERTON LEONGATHAEDITH CREEK*MAFFRACOBRAMKIEWA*ERSKINE PARKSMITHTONP rocessing PlantHead OfficeDevondale milk Collection AreaMurray RiverGoulburn River* On 2 May 2017, MG announced the closure of Edith Creek, Rochester and Kiewa facilities.

8 Edith Creek will close by Q2 FY18, Rochester by Q3 FY18 and Kiewa by Q1 GOULBURN CO-OPERATIVE CO. LIMITED Supplier HANDBOOKS upplier services and support2In this Field Share Regular Income Next Generation Field Services contacts5 Murray GOULBURN CO-OPERATIVE CO. LIMITED Supplier HANDBOOKSUPPLIER SERVICES AND SUPPORTF ield ServicesMG employs a team of approximately 40 Field Service Officers (FSOs) throughout Victoria, Tasmania, New South Wales and South Australia. The role of our FSOs is to provide suppliers with support on a range of technical, financial and industry FSOs maintain regular contact with MG suppliers, act as the local face of the co-operative, and facilitate access to a large suite of assistance, ranging from farm budgeting and milk quality support to guidance in meeting regulatory and sustainability requirements.

9 Our aim is to support our suppliers so they can profitably grow and develop their farm equityIn accordance with MG s co-operative principles, suppliers of MG must own shares in MG. The principles governing the requirement for suppliers to own shares in MG are set out in MG s Share Standard Policy, Constitution and Share Offtake Policy (each document is currently located on our website at ).Share StandardThe Share Standard is measured in kilograms of milk solids (kg MS), and for each shareholder, equals the shareholder s nominated share allocation percentage multiplied by the relevant Supplier production standard for the shareholder s associated Supplier . This is calculated based on a Farm s average annual milk production over a rolling three-year period, multiplied by the designated milk proceeds percentage for that Supplier .

10 Each shareholder is expected to satisfy their Share key provisions relating to our Share Standard are: A shareholder may not hold more than percent of MG s total ordinary shares regardless of the amount of milk they supply to MG (referred to as the Hard Cap). Shareholders who are below their Share Standard cannot sell MG shares through the Shareholder Trading Platform (STP). They can, however, buy MG shares through the STP up to the Hard Cap. Shareholders who hold shares in excess of the Share Standard can sell shares (down to their Share Standard), subject to the three-year sell down rule in certain circumstances, or buy shares through the STP up to the Hard from the requirements detailed above, there are no further implications for shareholders who do not meet the Share refer to the Share Standard Policy for more rights in relation to SharesShareholders can vote with their MG shares up to their Share Standard (referred to as voting shares).