Milk intake drop won’t affect prices: MG
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.