Season price to impact farmers
TASMANIA’S Murray Goulburn milk producers may have to look at other supply options after a disappointing opening season price was announced.
Farmers will be paid just $4.70 a kilogram of milk solids at the start of the 2017-2018 season, but there is an industry consensus that is below production cost.
The announcement comes after MG suppliers have battled through a tough season of already low prices, with many suffering large financial losses.
Hopes of higher prices this year to help farmers get back on their feet are now gone.
Tasmanian Farmers and Graziers Association dairy council chairman Andrew Lester said the price was well below what farmers needed to be financially viable.
“It’s a disappointing price for suppliers, but the positive is that the company is being responsible and paying a price in line with what their markets will allow,” he said.
“Unfortunately, that’s not going to help the pain some producers are going to feel.”
While this year’s opening price of $4.70 a kilogram of milk solids is higher than last year’s $4.31, it is still well below the cost of production for most farmers. The company is forecasting its full-year price will be between $5.20 and $5.40/kg.
Murray Goulburn chief executive officer Ari Mervis said the company had taken a prudent view on key assumptions for commodity prices when setting prices.
“Although global commodity prices have shown some recovery since this time last year, whole milk powder and particularly skim milk powder prices remain under 10-year averages,” Mr Mervis said.
“We have also had regard to Global Dairy Trade auction results over the past two months and current futures pricing, both of which suggest some ongoing price volatility in global markets.”
Rival processor Fonterra has yet to announce its season opening price, but has forecast its full-year price, which includes extra payments, would be higher at $5.70–$6.10/kg.
Last season, both companies faced widespread anger from suppliers after introducing major cuts at the end of the season and price clawbacks.
This left many producers owing the companies money after supplying milk to them for almost the entire season at a higher price.
Dairy farmers Michael and Vivienne Quilliam, from Togari in the north-west, have been supplying Murray Goulburn for about three years and said many producers would face difficult decisions.
“It’s a conundrum really because we need two processors in the state ... but with the difference in the prices I wouldn’t be surprised to see people going over to Fonterra if they can,” Mr Quilliam said. “We feel like we want to keep supporting Murray Goulburn, but we’ve got a business to run too.
“It’s hard because we’ve worked seven days a week for the last year and really come out of it with a loss.”