By doing so he will be giving Murray Goulburn chair Phil Tracey plenty to think about before he sets his price later this week, with the market tipping a low start of around $4.80 a kilo before finishing the season at $5/kg.
Just what you can afford to pay farmers depends on what you produce.
In Irvin’s case it is about 50 per cent cheese, about 25 per cent nutritional powder and about 25 per cent cream cheese and commodity milk powder.
Murray Goulburn is more weighted towards the commodity end, which is why the market is tipping a lower price along the lines of the $4.80 selected by the Saputo-controlled Warnambool Cheese and Butter.
The good news for all concerned is the latest figures from Europe show signs of a production slowdown, with output up only 1.6 per cent in the month of April. In past months output has risen five per cent or more.
The end of quotas in Europe and tighter import controls in Russia are a key reason why commodity prices have slumped more than 50 per cent in the last couple of years.
Commodity-based producer Fonterra has recently set its farmgate price at $NZ4.25 a kilo but it is yet to set its Australian price.
This will be dependent in part on what Murray Goulburn does on Thursday.
Murray Goulburn is presently paying around $5 a kilo and Fonterra is paying just $1.91 to bring the average price for the season to $5 kilo.
Generally processors pay a lower price at the start of the season and then gradually increase it as the year goes on.
This year is only the second time since deregulation in 2000 that prices have fallen during the year. The previous time was in 2009, in the wake of the GFC.
The ACCC is still looking at the Murray Goulburn and Fonterra price cuts for possible misleading statements to farmers and alleged unconscionable conduct.
Rabo Bank is forecasting a return to better global markets next calender year with continued signs of a slowdown in production this year.
Source: TheAustralian