Cooperatives in The Stock Market

I don't know why it is that Australian Agricultural companies that love burning shareholders funds, they are better than the average gold miner at doing it!.

The latest is the Murray Goulburn situation that has cost unit holders at least half of their capital so far.

You would wonder how they got this so wrong with the boom in Baby milk products going to China.

Murray Goulburn have announced a 15% reduction in the price paid to producers, so plenty of pain there, given that the low prices they were getting were probably already below break even!
And given almost zero allocation for irrigation in northern Victoria, many will not survive.

And this is the good news! it looks like they are still borrowing heavily to pay for it.
The plan is to fund it by growing the debt to nearly $600 Million, over the next couple of years, and ask the farmers to pay it back in the form of lower milk prices when things come good.
Scouce Australian Financial Review Murray Goulburn Problems

So unless there is a serious improvement in the global oversupply situation, I don't think there is a lot of hope for unit holders.

The farmers are probably taking most of the pain, as you would imagine they put up most of the $500 million in the unit trust float, but some will be Institutional or Mum and Dad investors and they will rightly feel misled and deceived.

The question should be "should cooperatives be allowed on the ASX"?
There is always this conflict when you have A and B Class shareholders.
The charter of a coop is always to maximize returns to the producer, (A class Shareholder).
Unfortunately the B class shareholder will always miss out in tough times.

It doesn't really matter, they can argue as much as they like, the proof is in the result.
You should avoid owning stocks with this type of share ownership structure, as it has proven in other primary production areas.
Its the ambiguity, and smoke and mirrors style of listing that annoys me, who owns what?
What is an A class share, what is a B class share,
Who has a vote?

Think AWB, 2005 price of Just over $6.00, de listed in 2010 at $1.49.

Makes you wonder who's going to fund this so called dining boom in China, that we are supposed to be enjoying, we are at risk of stuffing it up!

And I doubt there will be much of a queue to throw money at this mob!

Why should we invest, even at a low price, do we have any confidence in the plan?
And i cant see the institutions risking their shareholders funds, it would be irresponsible!

And why would you invest in Agriculture in Australia if your an ordinary investor, might as well buy a mining company and watch them go broke!

At least as a shareholder with an ordinary share, you get a say at The AGM!

But its pretty serious for the farming family's involved, they will be the ones that take the pain!

Strangely enough the main news story was the Parramatta Eels salary cap controversy, that will cost the nation bugger all!

Nothing about a problem in one of our few successful industries!