Price rises buoy dairying


Price rises buoy dairying

DAIRY farmers have more to be optimistic about after the first step-ups of 2019 were announced recently, with hopes other milk processors will follow.

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Saputo Dairy Australia announced a step-up in its farmgate milk price for 2018-19 of seven cents per kilogram of butterfat and 14 cents per kilogram of protein. Media Statement

Bega Cheese revealed a step-up of 14 cents a kilogram of milk solids, via an increase of $0.096 a kilogram of butterfat and $0.192 a kilogram of protein.

Saputo’s payment is retrospective and applies to all qualifying milk supplied by current Warrnambool Cheese and Butter and Saputo Dairy Australia suppliers from July 1, 2018.

The payment will be made with January 2019 proceeds during February 2019. This increases Saputo’s average farmgate milk price for the 2018-19 season for suppliers in the Southern Milk Region to $6.05 per kilogram milk solids, up from $5.95 per kg/ms.

“While world markets have seen some improvement recently due mainly to easing growth in milk production and a reduction in skim milk powder stockpiles in the EU, prices declined across dairy commodities during the first half,” a Saputo spokesperson from the company’s head office in Canada said.

“As such, the price increase reflects our acknowledgement that farm conditions remain challenging for our suppliers and any sustained market recovery is still ahead. 

“We will continue to monitor the market and review the milk price again in April 2019, in accordance with our quarterly review process.”

Bega Cheese executive chairman Barry Irvin said Bega’s step-up would be paid to continuing suppliers as a loyalty payment for milk supplied from July 1, 2018 to January 31, 2019.

“The current industry circumstances are very challenging across the supply chain. The prolonged drought in almost all of NSW and south east Queensland has impacted all in the industry,” he said.

“Significant cost increases in fodder and water, particularly in northern Victoria, combined with dramatic increased costs in electricity, have added a great deal of business pressure. Overall industry milk production is estimated to be reduced by as much as 500 million litres in the current year with northern Victoria production estimated to be 1.6 to 1.7 billion litres of milk.”

Mr Irvin said competition for milk was fierce with all companies keen to secure volume.

Burra Foods CEO Grant Crothers said the company was still considering whether to offer a step-up.

“We are in a review phase that will be completed by month’s end,” he said.

Mr Crothers is optimistic about the current state of the industry.

“Favourable seasonal conditions in the majority of West and South Gippsland in the last quarter of 2018 have been critical to manage cost of production at farm gate in a drought year,” he said.

“Demand is firm with commodity prices showing signs of recovery and we are happy to be seeing a relatively export friendly Australian dollar.

“A farm milk price greater than $6 has been achieved only a few times in the past 15 years and will get close for the majority of our milk supply partners in 2019.

“But while farm revenues are reasonably strong, we well recognise that costs are fast increasing so margin squeeze is a huge challenge for all dairy farmers.”  

A Fonterra spokesperson said the company was working through its bi-monthly price review and would advise farmers once this review was finalised. Fonterra’s current average milk price is $5.98kg/ms.

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Posted by on Feb 12 2019. 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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