MURRAY Goulburn suppliers will be paid as little as $4.31 a kilogram milk solids, after the processor announced opening prices for the 2016-17 financial year.
The price allows for MG’s milk supply support package repayment, estimated at 14 cents/kgMS, bringing the overall price to $4.45/kgMS. MG interim chief executive officer David Mallinson said global conditions and forecasts for 2016-17 could lead to prices rising to $4.80/kgMS by June 2017.
Fonterra has announced it will have an opening price of $4.75/kgMS, with potential to close the year at $5.
Fonterra chief operating officer of velocity and innovation Judith Swales said this was a responsible opening price that reflects current market conditions.
“Our forecast is based on the Australian dollar holding at around 74 cents to the US dollar and reflects the revenue we expect to earn on products produced using our manufacturing assets,” she said.
“Our farmgate milk price in Australia is also impacted by global dairy markets given our mix of domestic and export sales.”
Other processors to release opening prices were Bega Cheese at $5/kgMS and Warrnambool Cheese & Butter at $4.80/kgMS.
SA Dairyfarmers Association acting president Nick Brokenshire said the prices were disappointing.
“Things are going to be very tight for the next 12 months,” he said. “That’s on top of the enormous pressure dairyfarmers are already under.”
Mr Brokenshire said the industry had been expecting lower prices, following late season cuts from Murray Goulburn and Fonterra. But he expected prices between $4.80-$5/kgMS – already below the cost of production.
“Farmers can’t keep operating below the cost of production for a prolonged period of time,” he said. “It’s not a viable industry at those prices.”
Mr Brokenshire said it was also worrying, one month after the federal government announced its dairy support package, including $555 million in concessional loans, that SA dairyfarmers still had no guidelines.
“Farmers trying to do budgets need to know if they’ll be able to access the low interest rates,” he said.
Opposition agriculture spokesperson David Ridgway said the wait was disappointing.
“Vic and Tas dairyfarmers know if they will be eligible for concessional loans and can start to prepare a business plan and budget to see them through these tough times,” he said.
Agriculture Minister Leon Bignell said SA was the first jurisdiction to commit to the dairy loans scheme and first to roll-out funds for financial counselling through the Taking Stock program.
“It then took the federal government three weeks to send the SA government the package of measures for approval,” he said.
He said PIRSA has been working with the Treasury, the SA financing authority and the federal Department of Agriculture to get it finalised as quickly as possible.
Mr Bignell expected the loan agreement to be signed imminently.
Elizabeth Anderson
Editor of Stock Journal.
Editor of Stock Journal.
