Farmgate breakthrough as Bega steps up for southeast Australian suppliers

After eight months of the supplier payment status quo, Bega has been the first to break from the major processor pack with a farmgate milk-price rise.

Bega is increasing prices paid to suppliers by $0.10/kg milk solids across southeastern Australia. Picture: Zoe Phillips

BEGA has broken the eight-month farmgate impasse, becoming the first of the big three processors to step up in the 2020-21 season.

Processor management announced this morning it will increase prices paid to suppliers by $0.10/kg milk solids across southeastern Australia.

The move represents a lift from $6.40 to $6.50/kg milk solids in southern Victoria and $6.55 to $6.65/kg milk solids in northern Victoria.

Bega Valley region suppliers will now receive $7.60/kg milk solids.

Saputo and Fonterra remain at $6.40/kg milk solids, a figure confirmed before the start of the 2020-21 season in June 2020.

“The increase reflects a level of market improvement being experienced despite the COVID-19 and higher currency impacts locally and internationally,” Bega management said.

“The increase reflects Bega’s continued position to ensure its milk price are competitive with other dairy processors in the various regions it operates.”

Management noted the increases did not apply to Bega Dairy and Drinks and DFMC contracted suppliers, recent acquisitions by the Australian-owned processor.

In a statement to suppliers, Bega Cheese chairman Barry Irvin indicated the processor would continue to review farmgate prices considering market changes and its competitive position.

Mr Irvin said as part of Bega’s integration with the Lion Dairy and Drinks business: “We are very optimistic about our future creating new opportunities for our company and our suppliers, and the new season will see the company consider new milk supply and milk pricing arrangements that are specific to a region or a brand.

“These changes will be communicated in the months leading up to the new season.

“The increase in milk prices of $0.10 will be paid as a loyalty step up on milk received to date and an increase in milk price for the rest of the year.”