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.
The price drop comes after Murray Goulburn Cooperative Co. Ltd announced last week that have ‘overpaid suppliers’.
While Mr Connor, who farms at Nangkita near Mount Compass, does not supply to Murray Goulburn he has concerns about the potential knock-on effect.
“It will have an impact right through the industry,” he said.
“Murray Goulburn is recognised as a price-setter.”
The drop is from $5.60 per kilogram milk solids to between $4.75 and $5 per kilogram, down from about $6 per kilogram 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.”
“Murray Goulburn were confident until recently that it could maintain $5.65 per kilogram, but now they can’t even do $5 per kilogram.”
Mr Connor said it comes as a double blow on top of a tough season.
In his role as Dairy South Australia chair, Mr Connor said surveys showed that farmers were already increasingly focused 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.”
President of the South Australian Dairyfarmers Association (SADA) David Basham released a statement saying they were shocked at the announcement.
He said they are doing all they can to protect the health and wellbeing of farming families and members of the SADA and have been in contact with the Federal Minister for Agriculture, Rural Business Support and others.
“As soon as we are confident we understand the long-term implications on farmers and the dairy communities we will be in contact again with our members,” he said.
