Dairy farmers’ season of lost hope as milk price rise evaporates

Australian dairy farmers have been dealt a financial blow after the nation’s largest dairy processor, Murray Goulburn, conceded it would not be able to raise farm­gate milk prices this year as hoped.
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Murray Goulburn chief executive Gary Helou told the giant ­co-operative’s 2500 farmer-suppliers yesterday there would be no big price jumps forthcoming to reach the earlier forecast average of $6.05 per kilogram of milk solids for 2015-16.
Instead, the July 2015 starting price of $5.60 a kilogram of milk solids — equal to 42c a litre of milk — will at best be maintained for the whole of the current financial year and there will be no major “steps up” or price rises as many farmers had expected.
Mr Helou said low global dairy commodity prices had cut 34 per cent off Murray Goulburn’s annual net profit, despite its significant shift towards higher-value processed dairy products, forcing a readjustment in the farm milk prices it pays to 7 per cent below last year’s record level.
Murray Goulburn, which buys about 37 per cent, or 3.6 billion ­litres, of the milk produced by Australia’s $4 billion dairy industry to supply its 10 processing plants, is regarded as the key price-setter that other large processors will now follow as they set farmgate prices.
Central Victorian dairy farmer and Murray Goulburn supplier Rob Marshall said it would now be tough to make a profit this season, after a dry spring and summer and having to pay high water and hay prices to keep his 95 milking cows productive.
But the Dhurringile milk producer said that, while he would have been delighted to have been paid the $6.05 a kilogram (45.8c a litre) for the 2500 litres of milk he sells each week as originally forecast by Murray Goulburn, he ­realised several months ago it was wishful thinking given plunging world dairy commodity levels.
“I’m not whingeing but it does make quite a difference getting $5.60 a kilogram rather than $6.05 a kilogram ­average; for me that’s $14,000-$15,000 I had budgeted for that I now won’t be getting,” said Mr Marshall, who bought his first farm last year.
“We will get through, but it does make it hard when there are not steps up in price for the season at all; the scary thought on everyone’s mind now is how low will the opening price fall when the next season opens in July?
“The problem for farmers is that this price level is marginal for most of them and below the cost of production for many, particularly when they have had to buy more water and hay this year — and with Murray Goulburn the largest processor and the price-setter, this effectively rules out any upside moves by anyone else.”
Smaller rival processor Warrnambool Cheese & Butter recently announced it would not be making any farmgate milk price step-ups this season and New Zealand-owned Fonterra has been openly hinting about the possibility of reviewing downwards the prices its pays to its Australian farmers.
Mr Marshall said he understood the financial pressures on Murray Goulburn and that the company had always been upfront about the likelihood of not being able to increase payments. “They do a fair bit to help their farmers out in other ways too; we have sourced cheaper hay collectively through them and received 50 megalitres of (irrigation) water at about half the normal price from Murray Goulburn in a ballot. Every little bit helps,” he said.
Rabobank dairy analyst Michael Harvey said it was no surprise that Murray Goulburn had struggled to lift its milk price paid to farmers, after world dairy commodity prices plunged by between 50 per cent and 60 per cent 18 months ago and remained depressed.
He said the fact that Murray Goulburn could maintain a price of $5.60 a kilogram for its Australian farmers when New Zealand farmers were being paid just $NZ4.15 ($3.80) a kilogram showed how successful the company had been in aggressively moving to a higher-value “decommoditised” processing and product line strategy.

 Source: The Australian

Mirá También

Así lo expresó Domingo Possetto, secretario de la seccional Rafaela, quien además, afirmó que a los productores «habitualmente los ignoran los gobiernos». Además, reconoció la labor de los empresarios de las firmas locales y aseguró que están «esperanzados» con la negociación entre SanCor y Adecoagro.

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