Conservative opening milk price
• Dairy Council Chairman Geoff Cox.
By Taylor Clyne
June 03, 2020
It’s been a big week for Australia's dairy industry, as the deadline arrived for the announcement of standard minimum farmgate milk prices on Monday June 1.
Under the new mandatory Dairy Code of Conduct, processors must publish one or more standard forms of agreements on their website for the world to see a month out from the new price implementation.
For local dairy farmers, now spoilt for choice with who they supply their milk to, prices for Fonterra, Lactalis and Saputo were the companies in the forefront.
After circulating a letter to suppliers earlier this year with an expected opening price in excess of $7.00 it was pleasing to see Lactalis, formerly known as Parmalat, stick to their predictions opening well above its competitors at $7.01/kgMS.
Those suppliers who made the switch from Fonterra to Saputo in 2016 would be more than pleased to see the company open 34cents higher at $6.40/kgMS.
Fonterra announced its opening price at a conservative $6.06/kgMS.
However two days later on June 3, the company quickly revised their weighted average to match its direct local competitor at $6.40/kgMS.
The move brings Fonterra in line with Saputo and Bega Cheese.
Dairy Council Chairman Geoff Cox of Ringarooma said the universally released prices created certainty in the industry going forward.
“It means farmers can now budget,” he said.
“I think the prices are what we expected them to be with about an 8-10% reduction which is unfortunate but reflects international prices, currency movements and the current market with COVID-19.
“It’s conservative but I’d hope this means we’ll see step ups throughout the season.
Since the implementation of the new Dairy Code, a harsh reaction to the 2016 clawback which saw many suffer, will mean companies can’t drop below the opening price without approval from the ACCC.
“Some of the input prices for fodder and grain are quite inflated, I’d like to see these decrease and balance out over the season.”
Mr Cox also encouraged local farmers to read all the information supplied regarding coronavirus and get properly across the new regulations.
“We all need to have a COVID safe plan and be operating in a ready environment.
“There is lots of support through Dairy Australia, and I encourage everyone to get across it.”
The new farmgate milk prices will take effect on July 1.