Farmers disappointed by milk companies

MILK processing companies have disappointed dairy farmers by leaving opening price announcements to the last minute.
More disappointing still were the numbers, despite market indicators pointing towards an opening price of around $6 per kilogram of milk solids.
Saputo opened at $5.75kg/MS and Fonterra at $5.85kg/MS, while Burra Foods has a forecast range of $5.60 to $5.90kg/MS.
Fonterra Australia said their’s was a “market based, sustainable price and another step towards pricing simplicity”.
Before Saputo and Fonterra announced opening prices, Rabobank suggested a full season milk price “higher than $6kg/MS was on the cards”.
In the lead up to the new season, which starts on July 1, Dairy Australia figures showed Gippsland dairy farmer confidence levels took a hit.
“Low farmgate prices was the main factor impacting on negative sentiment among Gippsland farmers, followed by high input costs and concerns around milk processing companies,” Dairy Australia senior industry analyst John Droppert said.
Outtrim dairy farmer Luke Lamers said while he still had confidence in the industry, he was lacking confidence in milk processing companies.
Mr Lamers said after a difficult couple of years, his family made the choice to switch to Fonterra, after 40 years with Murray Goulburn.
“This is our first season with Fonterra,” he said.
Despite Fonterra’s opening price being 10 cents higher than Saputo’s, Mr Lamers said it was disappointing they left it to the last minute to announce the price.
“They should have come out with it a month ago, to give us time to budget and prepare for the season,” he said.
Mr Lamers said world indicators suggested a realistic opening price would sit at $6kg/MS or above.
“They are not basing their price on market indicators. That’s why there was disappointment about it,” he said.
Mr Lamers said since the events that rocked the industry in 2016, processors had promised to be more transparent with their pricing systems.
“I still feel like they are playing around. I wouldn’t be surprised if Saputo turned around now and increased its price,” he said.
“There is a lot of disappointment in the companies, because after all we have been through, they are still behaving in the same way.”
Mr Lamers said if the milk price was less volatile, he would be more confident.
“At the moment, we have to take it year by year. It is impossible to budget too far ahead,” he said.
Mr Lamers’ family farms across 1000 acres and milks 580 cows to produce around four million litres a year.
A decent spring in 2017 saw a good supply of silage and hay cut off the farm.
“We are still feeding home grown silage and still have hay in the shed for the dry cows. We are self sufficient at the moment, which is one less thing to worry about,” he said.
“With the late break this year, we were lucky to have the silage we do.”
Grain prices have increased $60 per tonne over the last few months and electricity prices have increased 50 percent over the last six months.

Too late: Outtrim dairy Farmer Luke Lamers said he was disappointed in the late opening price announcement made by Fonterra, which was made just 10 days before the start of the new season on July 1.

Short URL: https://thestar.com.au/?p=25275

Posted by on Jun 26 2018. Filed under Rural News. You can follow any responses to this entry through the RSS 2.0. You can leave a response or trackback to this entry

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