FLEURIEU dairyfarmer Michael Connor was left feeling “uneasy” by the news milk processor Murray Goulburn has decided to drop the price it would pay suppliers by about 10 per cent.
While Mr Connor, who farms at Nangkita near Mount Compass, does not supply to MG he has concerns about the potential knock-on effect.
“It will have an impact right through the industry,” he said. “MG is recognised as a price-setter.”
The drop is from $5.60 a kilogram milk solids to between $4.75 and $5/kg, down from about $6/kgMS in 2015.
Mr Connor said it put the price below cost of production for many farmers.
“I am confident all companies recognise that is way below the cost of production,” he said. “It’s the shock of the announcement that has caught me out.
“(MG) were confident until recently itt could maintain $5.65/kgMS, but now they can’t even do $5/kgMS.”
Mr Connor said it comes as a double blow on top of a tough season.
In his role as DairySA chair, Mr Connor said surveys showed farmers were already increasingly focussed on their business, and the parts of it they could control. He believes this will continue.
He was hoping this was “just a blip”.
“We don’t want national production to drop as an industry; we want to hold production and preferably lift that,” he said. “I don’t want to lose any confidence in the industry, and I don’t want investment confidence to drop.”
