Opening prices may improve confidence

Opening milk prices up to $1 per kilogram milk solids more than last year are expected to improve confidence amongst dairy farmers.

While seasonal conditions and input costs were a major concern of farmers during surveys earlier this year, the opening prices announced by companies in the past few weeks are expected to create some positivity.

Saputo is yet to announce its opening prices but in Gippsland, Fonterra and Burra have both delivered opening prices higher than last season’s openers of between $5.60 and $5.90 per kilogram milk solids.

Fonterra Australia has advised its suppliers of an opening price of $6.60 per kilogram of milk solids for the 2019-20 season.

Fonterra Australia managing director René Dedoncker said announcing the season’s average farmgate milk price in May would help farmers make on-farm decisions.

“As our industry and business evolve to deal with a smaller milk pool, we have a stronger focus on servicing local demand which brings greater opportunity for certainty on pricing.

“The broader global supply and demand picture is positive, with demand expected to remain strong across key trading partners and a favourable exchange rate.

“Importantly, it’s a competitive milk price for our Australian farmers that enables us to maintain a sustainable model in Australia and deliver a return on investment for our business,” Mr Dedoncker said.

Burra Foods was the first to announce its opening prices earlier in May with an opening range of $6.40 to $6.70/kgMS.

In a letter to milk supply partners, Burra Foods chief executive officer Grant Crothers said the announcement represented a 14.5 per cent increase on the opening price for the current year.

“The price is supported by our confidence in demand for the Burra product range and current outlook for commodities,” he said.

Mr Crothers said the earlier announcement by Burra was in direct response to requests from suppliers for earlier next season price signals.

“This is another initiative by the Burra team to provide our milk supply partners with superior information and increased certainty to assist them to better run their business,” continued Mr Crothers.