Milk in­take drop won’t af­fect prices: MG

Dairy News Australia - - NEWS -

MUR­RAY GOUL­BURN’S ex­pected milk in­take this fi­nan­cial year has fallen to 2.3 bil­lion litres, but the co­op­er­a­tive says this should not af­fect the fore­cast fi­nal milk price range of $5.20–$5.50 kg/milk solids. The milk in­take es­ti­mate is 200 mil­lion litres lower than orig­i­nally planned, and more than a third be­low what it col­lected the pre­vi­ous sea­son as sup­pli­ers have opted to sign with the coop’s ri­vals. Fon­terra an­nounced its first step-up of the year in part due to the ex­tra milk in­take it has been able to achieve this sea­son. In a state­ment to sup­pli­ers, Mur­ray Goul­burn said the re­duc­tion in milk in­take has not im­pacted the open­ing milk price of $5.20/kg MS as the im­pact of the re­duc­tion in milk in­take “has been off­set by var­i­ous cost and busi­ness im­prove­ments com­pared to bud­get”. The co-op did state that if the re­cent strength­en­ing of the Aus­tralian dol­lar was to con­tinue over the full fi­nan­cial year, this could cre­ate some un­cer­tainty in re­la­tion to the achiev­abil­ity of $5.50/kg MS. MG has been forced to close sev­eral plants this year in a bid to max­imise its ef­fi­ciency, in­clud­ing its Kiewa fac­tory in north east Vic­to­ria.

The co-op also an­nounced it has sold its Kiewa Coun­try brand and cer­tain as­so­ci­ated as­sets to a lo­cal busi­ness that is ex­pected to recom­mence lo­cal man­u­fac­ture in the future. Mur­ray Goul­burn’s de­ci­sions to close plants has af­fects its re­la­tion­ships with cus­tomers. Rob Hal­lum, owner of the Cen­tral IGA Su­per­mar­ket in De­niliquin, NSW, said the coop’s de­ci­sion to close its Rochester and Kiewa plants had also forced him to re­con­sider his re­la­tion­ship with the com­pany. He said his de­ci­sion was based on ob­tain­ing the fresh­est prod­uct for his cus­tomers, at a rea­son­able price. “We have been ad­vised the Kiewa fac­tory in Al­bury will stop pro­duc­ing milk, with milk pro­cess­ing to be in Mel­bourne in­stead. “It is dif­fi­cult for us to ar­range trans­port out of Mel­bourne, and it also adds to the num­bers of days lost to pro­duc­tion. “Milk pro­cessed at Mel­bourne will not be as fresh for our cus­tomers, and the shelf life of that prod­uct will be re­duced. “So rather than sup­ply­ing (Mur­ray Goul­burn) Devon­dale milk, we’ll have Sun­gold. “It’s the next best com­pany, we be­lieve, in try­ing to keep things lo­cal and fresh.” Pricing is not the only fac­tor mak­ing it dif­fi­cult for pro­ces­sors to se­cure sup­ply, with the na­tional milk pool in de­cline. Dairy Aus­tralia an­a­lyst Lau­rie Walker said Aus­tralian milk pro­duc­tion for the 2016–17 sea­son to­talled a lit­tle over 9000 mil­lion litres com­pared to the 9680 mil­lion litres pro­duced dur­ing the 2015–16 sea­son, a fall of 6.9 per cent. Monthly milk vol­umes are down more than 10 per cent at the be­gin­ning of the sea­son. “The most se­verely af­fected states have been Vic­to­ria and South Aus­tralia, down 8.0 per cent and 8.2 per cent re­spec­tively,” Mr Walker said. “In South Aus­tralia, most of this de­cline was due to lower vol­umes in the south­east around Mt Gam­bier, which ac­counts for over half of the state’s pro­duc­tion.” Vol­umes out of Mt Gam­bier were down over 11 per cent to around 270 mil­lion litres, while the rest of South Aus­tralia’s milk pro­duc­tion was by sig­nif­i­cantly less, around 4 per cent. North­ern Vic­to­ria fin­ished the year at around 1750 mil­lion litres com­pared to 2090 mil­lion litres the year be­fore, a fall of 16.5 per cent. Western Vic­to­ria and Gipp­s­land fin­ished the sea­son down 4.2 per cent and 4.0 per cent re­spec­tively. With the sig­nif­i­cant fall in vol­umes out of north­ern Vic­to­ria, the re­gion’s share of Vic­to­rian milk pro­duc­tion has fallen to around 30 per cent, which con­trasts with a high­point of 41 per cent in 2001–2002, while Gipp­s­land and western Vic­to­ria have both in­creased their share of milk pro­duc­tion.

Mur­ray Goul­burn has been forced to close three plants, in­clud­ing Rochester (pic­tured), to max­imise its ef­fi­ciency.

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