International food and beverage company Lion has announced an overhaul of its milk pricing structure.
The company this morning released three options for its suppliers in southern states.
Agricultural procurement director Murray Jeffrey says feedback from suppliers prompted the company to change its pricing.
He says the options include a variable pricing model with a guaranteed safety net, a one year fixed price offer and a three-year fixed price offer which may apply to up to 50 per cent of a supplier’s total volume.
«We’ve clearly heard from our farmers one of the biggest key components they’ve had on farm of recent years is the volatility and the management of volatility within their dairy farms becomes increasingly difficult as prices rise and fall very dramatically,» Mr Jeffrey said.
«We’ve seen a lot of volatility in the world markets of recent years.
«So we’ve taken the very positive step of trying to eliminate some of that volatility for the farmers by offering a three-year price increase.»
Farmers who opt for variable pricing will receive an opening price of $6.35/kg of milk solids.
Lion’s fixed price for 2014/15 will be $6.40/kg of milk solids.
Suppliers that sign up for three years of fixed pricing will receive $6.14/kg of milk solids.
The Lion announcement comes days after Murray Goulburn and Fonterra announced their opening prices for suppliers.
Fonterra will offer Victorian and Tasmanian dairy farmers $5.80 per kilogram of milk solids as its average opening price.
Murray Goulburn will open with $6.00 per kilogram of milk solids for its southern milk pool.
Mr Jeffrey says he’s optimistic Lion’s prices will attract suppliers to his company.
«We’re looking to attract a lot of supply this year so we’re very keen to speak to new people,» he said.
Source: ABC