Fonterra, the nation’s second biggest dairy processor and a major player in the Victorian industry, will increase payments for milk supplied in May and June by $2.50 a kilogram of milk solids to $4.41.
In early May, Fonterra announced it would cut the price paid to farmers for their milk, just a week after the industry price-setter, Murray Goulburn, slashed its farmer payments.
Fonterra, which is also the world’s biggest dairy exporter, said an «additional Autumn offset» would be paid to farmers in July and August.
The money would «effectively be drawn through the redistribution» of payments in the 2016-17 financial year, it said.
While the partial about-face on payments by the company will mean farmers will receive higher payments early in the next financial year, it has also added to frustration in some quarters.
Fairfax Media has been told of cases where Fonterra suppliers had already responded to the earlier price cut by «drying off» cows to stop them producing milk, or by selling cows.
Meanwhile, the crisis hitting the dairy industry deepened further on Monday, with a class action lawsuit filed in the Supreme Court of Victoria alleging that dairy processor Murray Goulburn and its board allegedly misled investors ahead of its float last year.
The legal move came less than three weeks after processor Murray Goulburn slashed its profit forecast, lowered its milk payments to farmers and said its managing director Gary Helou and its chief financial officer Brad Hingle would depart.
Also on Monday, farm lobby group Farmer Power said there was a «groundswell of support for a 50 cent dairy levy», with the money raised to be passed on to farmers. It also called for an immediate cash injection to be paid to struggling dairy farmers.
Fonterra suppliers started learning of the «price support» move on Friday. Fonterra has about 1200 Australian dairy farmer suppliers, with about 900 of those in Victoria. It collects about one-fifth of Australia’s fresh milk.
Fonterra Oceania managing director Judith Swales said that since Fonterra announced a drop in farmgate milk prices, it had heard concerns raised by many farmers.
«We know the events of the last few weeks are incredibly tough on dairy farmers. We are listening and we know that changes need to be made. Our priority is to support all our farmers, act fairly, and continue to operate responsibly and transparently so that we have a sustainable Australian dairy industry,» she said.
«Although the reduction in the farm-gate milk price affects all farmers, we recognise that it has a greater impact on suppliers with autumn calving herds given the reduction has had to happen late in the season and we need a programme that is fair across all our farmers,» she said.
United Dairyfarmers of Victoria president Adam Jenkins said the Fonterra price move was an improvement for suppliers, but warned that it didn’t go far enough. And he described Fonterra’s earlier move to cut payments as unacceptable. «The trust has already been broken,» he said.
Last August, Fonterra chief executive Theo Spierings warned that the farm-gate milk price paid to Australian farmers did not properly reflect the collapse in global dairy prices. «What you cannot do is pay money that you have not earned,» he said.
Fonterra, which is also the world’s biggest dairy exporter, said an «additional Autumn offset» would be paid to farmers in July and August.
The money would «effectively be drawn through the redistribution» of payments in the 2016-17 financial year, it said.
While the partial about-face on payments by the company will mean farmers will receive higher payments early in the next financial year, it has also added to frustration in some quarters.
Fairfax Media has been told of cases where Fonterra suppliers had already responded to the earlier price cut by «drying off» cows to stop them producing milk, or by selling cows.
Meanwhile, the crisis hitting the dairy industry deepened further on Monday, with a class action lawsuit filed in the Supreme Court of Victoria alleging that dairy processor Murray Goulburn and its board allegedly misled investors ahead of its float last year.
The legal move came less than three weeks after processor Murray Goulburn slashed its profit forecast, lowered its milk payments to farmers and said its managing director Gary Helou and its chief financial officer Brad Hingle would depart.
Also on Monday, farm lobby group Farmer Power said there was a «groundswell of support for a 50 cent dairy levy», with the money raised to be passed on to farmers. It also called for an immediate cash injection to be paid to struggling dairy farmers.
Fonterra suppliers started learning of the «price support» move on Friday. Fonterra has about 1200 Australian dairy farmer suppliers, with about 900 of those in Victoria. It collects about one-fifth of Australia’s fresh milk.
Fonterra Oceania managing director Judith Swales said that since Fonterra announced a drop in farmgate milk prices, it had heard concerns raised by many farmers.
«We know the events of the last few weeks are incredibly tough on dairy farmers. We are listening and we know that changes need to be made. Our priority is to support all our farmers, act fairly, and continue to operate responsibly and transparently so that we have a sustainable Australian dairy industry,» she said.
«Although the reduction in the farm-gate milk price affects all farmers, we recognise that it has a greater impact on suppliers with autumn calving herds given the reduction has had to happen late in the season and we need a programme that is fair across all our farmers,» she said.
United Dairyfarmers of Victoria president Adam Jenkins said the Fonterra price move was an improvement for suppliers, but warned that it didn’t go far enough. And he described Fonterra’s earlier move to cut payments as unacceptable. «The trust has already been broken,» he said.
Last August, Fonterra chief executive Theo Spierings warned that the farm-gate milk price paid to Australian farmers did not properly reflect the collapse in global dairy prices. «What you cannot do is pay money that you have not earned,» he said.
Source: The Age
