The figure is higher than rival Murray Goulburn, which is offering $4.31kgms, but below the opening prices of Bega Cheese at $5kgms and Warrnambool Cheese and Butter at $4.80kgms.
Fonterra is a New Zealand owned cooperative, the world’s largest dairy exporter and fourth largest dairy company, accounting for around 40 per cent of world trade.
Across the Tasman, Fonterra has been reducing the price it pays farmers since last year, in line with adownturn in the export commodity market.
But it’s contracts with Australian growers prevented it from cutting prices until rival Murray Goulburn moved, a process started last month when it announced a step down in prices shortly after MG.
In a statement, Fonterra senior executive Judith Swales said global market conditions meant the processor was unable to offer a higher price for the season starting on July 1.
She said the company forecasted a closing price of $5kg/ms.
«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.
«Our farmgate milk price in Australia is also impacted by global dairy markets given our mix of domestic and export sales.»
Ms Swales said slowing global production and increased imports in China, Asia and Latin America would help reduce the oversupply and improve prices in the next year.
The slew of price cuts has provoked an angry reaction from some politicians, with independent Senator for Tasmania Jacqui Lambie renewing calls for a 50 cent levy on milk sold domestically.
But that has been rejected by Deputy Prime Minister Barnaby Joyce as well as farmers and analysts, because only a fraction of the milk produced is sold on the domestic market.
The Victorian and Tasmania Governments have signed on to the Federal Government’s assistance package, which offers low interest concessional loans to distressed farmers.
Source: ABC
http://www.abc.net.au/news/2016-06-29/fonterra-slashes-milk-price/7552386
