Milk deal sours on low price

Countryman - - NEWS - Jenne Bram­mer

Par­malat-owned Har­vey Fresh re­ceived mixed re­ac­tions af­ter last week un­veil­ing de­tails of its new con­tracts to sup­pli­ers.

Com­pared with cur­ren­tyear con­tracts, the new terms ef­fec­tive from Jan­uary 1 of­fer a higher sum­mer price of 49¢/ litre and lower win­ter-spring price of 33¢/litre, in a bid to flat­ten the an­nual sup­ply curve.

On top of the base price, there are in­cen­tives for qual­ity and other fac­tors such as vol­ume.

Har­vey Fresh has a pol­icy of not speak­ing to me­dia, but in­dus­try sources say the pro­ces­sor es­ti­mated farm­ers could be down by 1¢/litre on av­er­age through­out the year.

Farm­ers were con­cerned about an even big­ger de­crease.

Farm­ers can opt to sign one, two or three-year con­tracts with the op­tion to re­new.

The price is re­viewed on a six-monthly ba­sis and farm­ers can end con­tracts within 60 days of the new con­tract tak­ing ef­fect.

“The new pric­ing aims to cap and re­duce pro­duc­tion by of­fer­ing a far lower price dur­ing spring when most milk is pro­duced,” one source said.

“This is par­tic­u­larly frus­trat­ing given pro­ces­sors had un­til re­cently en­cour­aged farm­ers to, at their own ex­pense, in­crease milk pro­duc­tion to cap­ture the Asian boom which did not even­tu­ate,” a sup­plier said.

Another source was con­cerned a vol­ume in­cen­tive re­mained in place, con­tra­dic­tory to Har­vey Fresh’s bid to curb pro­duc­tion.

Un­der this in­cen­tive, a smaller farmer pro­duc­ing one mil­lion litres an­nu­ally would re­ceive 3.5¢/litre less than a sup­plier pro­vid­ing more than 3.5 mil­lion litres, en­cour­ag­ing big­ger farm­ers to grow and smaller op­er­a­tors to strug­gle.

WAFarm­ers dairy sec­tion pres­i­dent Michael Par­tridge said the new con­tracts were fair and rea­son­able.

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