Murray Goulburn lifts farmgate milk price on back of global dairy rally

The nation’s largest milk processor has lifted the milk price it offers to farmers, amid a global dairy market rally.

Dairy farmer George Giliam on the family dairy property at Mirboo North. (Picture: Jason Edwards)

Battered dairy group Murray Goulburn has announced an increase in the milk price offered to its farmers, bringing it closer to the industry average after a sharp clawback in recent months.

The news comes amid reports of farmers increasingly shunning the nation’s largest milk processor.

The step-up of 15c brings the price offered to $4.46 per kilogram of milk solids.

It still compares unfavourably to an offer of $4.75 from Fonterra, $4.80 from Warrnambool Cheese and Butter, $5 from Bega Cheese and more than $5 from Lion.

However, Murray Goulburn (MGC) raised its full-year forecast from $4.45 to $4.88 per kg of milk solids.

The positive signal for beaten-down farmers comes after The Australian last week tipped imminent action from Australia’s processors after global dairy prices struck an 18-month high.

Murray Goulburn said the moves announced today would have no effect on its profit guidance given the uptick in global conditions.

“Market conditions remain volatile, however, we have been able to capture enough of the current uplift to pass on both a step-up and a modest increase in full-year forecast to suppliers today,” the group’s interim chief executive David Mallinson said.

He added there remained uncertainty around the sustainability of the recent sharp move higher.

“Whilst international dairy markets have improved recently, they remain below historical average levels,” he said.

“Recent signs of recovery have come as global milk supply slows year-on-year. However, commodity prices and the strength of the Australian dollar remain a source of risk to current full year forecast.”