Bega Cheese to hold farmgate milk price

UPDATE: FONTERRA Australia suppliers are still uncertain about their milk price this season.

FONTERRA Australia suppliers are still uncertain about their milk price this season.

Fonterra has warned since August last year of the possibility of a milk price step-down this season, but hasn’t confirmed any price movement yet.

In a statement the processor said: “Fonterra has been upfront throughout the season with suppliers around the sustainability of the Australian milk price.

“We have expressed caution to our farmers to budget conservatively.

“As matters develop we will continue to keep our farmers well informed.”

Warrnambool Cheese and Butter, Bega Cheese and Australian Consolidated Milk have confirmed their prices for the season. WCB, which is mostly owned by Canada’s Saputo, sent text messages to dairy farmers last night before sending out an official circular.

In the supplier letter, WCB senior vice president and general manager Richard Wallace said he was writing to “confirm and assure suppliers that WCB will be maintaining the opening average price of $5.60kg/MS for the remainder of the 2015/16 season”.

Yesterday, Bega Cheese confirmed it would hold its $5.60kg/MS farmgate price this season.

Bega Cheese executive chairman Barry Irvin said a categorical “no” when asked if the Australian Securities Exchange-listed processor would cut its farmgate price.

“We have obviously been managing to that milk price all year,” he said.

“We have continuously said if the market improves we would look to reflect that and obviously that hasn’t happened.

“We know it is particularly tough out there for farmers, it’s been difficult and we have been looking to manage our business to keep the confirmed $5.60 (kg/MS).”

No cut: Bega Cheese executive chairman Barry Irvin.

This comes as Murray Goulburn cut its farmgate price from $5.60kg/MS to $5.47kg/MS yesterday. Originally the co-operative forecast $6.05kg/MS for this season but this was revised in February to $5.60kg/MS. The $5.47kg/MS is a price supported by loans so the farmgate milk price does not fall to the $4.75-$5kg/MS, which is what MG said was the available southern milk region price for the rest of the season. The cost of funding the $5.47kg/MS will be recovered by MG from suppliers’ milk payments for up to three years.

Mr Irvin couldn’t provide any indication on next season’s opening milk price as Bega Cheese was in the budget process at the moment.

He said the company would look to provide an indication about price as early as possible, because farmers had to make important decisions about next year.

Mr Irvin said Bega Cheese was “always interested in looking at supply” but admitted the processor didn’t have room for “enormous amounts” of supply as they have been successful at retaining and growing the current supply base.

Any new supply taken on by Bega Cheese was considered and strategic, Mr Irvin said.

Warrnambool Cheese and Butter said it would communicate with suppliers tomorrow.