Dairy hopes climb
DAIRY farmers could receive further price rises before the end of the year, in the wake of an earlier step-up announced by Murray Goulburn last week.
MG announced a 3.5 per cent pay rise, equating to thousands of dollars. Burra Foods will also pay farmers more, while Fonterra is still assessing the market.
The income boost is vital to farmers following severe opening price cuts, leaving some farmers out of pocket and paying to produce milk.
MG chairman Ian MacAulay said while the company could not commit to further step-ups before the end of the year due to the volatile exchange rate, he did not rule out the possibility of further increases.
“We can certainly expect more step-ups in the second half of the year,” he said.
“We are not sure of where the exchange rate might go. We feel that prices have bottomed and the export market is showing signs of recovery.”
Fonterra’s national milk services manager, Heather Stacy, said the company would be monitoring the market, such as this week’s Fonterra global DairyTrade results and currency exchange rates, to see if the positive signs continue.
“Recently we have seen some positive early signs of a strengthening in commodity markets but these gains are yet to be consolidated,” she said.
“Over the season, Fonterra suppliers will still be better off under our prices and they already have the money from Fonterra in their pockets.”
Last Friday, Burra Foods announced an increase of seven cents a litre per kilogram of butterfat and 17 cents per kilogram of protein, effective from August 1.
Chief executive Grant Crothers said the worst of the world financial crisis and subsequent volatility was “behind us” and world dairy prices were starting to stabilise.
“The prediction of opportunities for some moderate price increase going forward and the faster than expected economic recovery in Asia is encouraging news,” he wrote to suppliers.
“We remain confident about opportunities available for the Australian industry and our own ability to continuously capture value.
“Subsequently I encourage you to consider all options to maintain or increase cost efficient production to maximise the eventual stronger milk price that most market analysts suggest will eventuate.”
MG’s 2600 dairy farmers will receive a step-up of $0.17/kg protein and $0.07/kg butterfat, to be paid with the September milk payments.
Mr MacAulay said the step-up was earlier than usual to help suppliers’ cash flow.
“It’s important but it’s not a large amount of money, but there is confidence that there is recovery and that is really important for rural economies as well as dairy farmers,” he said.
During a recent tour of Victoria talking to farmers at suppliers’ meetings, Mr MacAulay said some farmers were finding the prices inadequate to meet costs while others were struggling but accepting the peaks and troughs of the industry.
Despite what happens between now and the end of the financial year, MG managing director, Stephen O’Rourke expects the final milk price to be “very competitive”.
“MGC’s underlying financial strength had enabled the co-operative to deal with the impacts of the global financial crisis whilst maintaining the maximum farmgate price possible,” he said.
“We remain positive about the future demand for dairy products and despite tough market and seasonal conditions, MGC has embarked on additional strategies to improve farmgate returns while continuing to deliver quality products to our customers in Australia and overseas.”
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