Fonterra price cut ‘opportunistic’, says United Dairyfarmers of Victoria president

United Dairyfarmers of Victoria president Adam Jenkins was highly critical of the announcement that Fonterra would cut its farmgate milk price for the season from $5.60 a kilogram of milk solids to $5kg/MS.
It followed Murray Goulburn’s decision to cut the price to $5.47kg/MS for the rest of this season.
“When you look at some processors like Warrnambool Cheese and Butter and Bega, they’ve made commitments to finish the season (paying the forecast milk price),” Mr Jenkins said.
“That’s testament to their businesses and their suppliers, but others have taken the opportunity,” he said.
Mr Jenkins said Fonterra “may have taken the opportunity” to lower the milk price, only because it knew Murray Goulburn had already done so.

 

“To push debt across to the supplier base, that’s fundamentally wrong … you could assume it’s opportunistic,” he said.
Mr Jenkins said Fonterra had warned suppliers about the tough conditions on the global dairy market for months leading to its announcement.

“But to drop and claw back the price paid out is opportunistic and wrong,” Mr Jenkins said.

About 4000, or 80 per cent of, Victorian dairy farmers supply Fonterra and Murray Goulburn.
When Fonterra managing director Judith Swales announced the price cut — which could see farmers be paid as little as $1.91kg/MS for milk supplied during May and June this season — she said Fonterra had been required to maintain its price to match Murray Goulburn due to an agreement with the Bonlac Supply Company.
Under the BSC supply agreement Fonterra is required to match the “benchmark” price for milk — Murray Goulburn’s price.
Mr Jenkins said the UDV would strongly “scrutinise” the actions of the major companies.
He said that many dairy farmers across Victoria were feeling “angry, sad and let down” by Murray Goulburn and Fonterra’s decision to cut the milk price.
“The trust thing is hard,” Mr Jenkins said.

Source: WeeklyTimes
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