Australian dairy companies announces 2020/21 opening milk price
The opening milk prices of Australia’s major dairy processors have been revealed today. See what each company promised here.
FOR the first time, Australia’s major dairy processors are listing their opening prices for the forthcoming financial year in unison under new federal rules.
The mandatory dairy code of conduct, implemented earlier this year, requires processors to declare opening prices on June 1 ahead of the start of the 20120/21 financial year.
Prior to the regulatory change, processors staggered their opening announcements over a matter of weeks. The Weekly Times will keep you up-to-date with today’s developments here.
BULLA
Bulla has offered an average range of between $6.30 and $6.70 per kilo milk solids.
Chief executive Allan Hood said the processer had made a commitment to suppliers that it would “open strongly and early.”
“While the current climate presented many challenges for our business, we are pleased to have been able to honour this for the season ahead,” he said.
“We understand how important strong preliminary pricing is to our valued milk partners in enabling them to build sustainable businesses, especially in these difficult times.
“We are able to open this way each year thanks to our strong underlying business model, in particular, our domestic retail business. We have experienced solid sales growth across our cream and ice cream categories in recent months– especially our newly launched premium ice cream range, Murray Street – and our international business has also recovered much earlier than we had anticipated.
“While our opening milk price is lower than last year due to the shortfall in sales through our food service and cinema channels as a result of COVID-19, Bulla remains confident about the season ahead, and will be considering steps ups in the months to come if our momentum continues.”
NORCO
Norco has released its pricing for its Queensland and NSW dairy farmers.
The Byron Bay co-operative’s board is offering its northern farmers a base price of 51 cents a litre for the spring fresh milk, rising to a peak of 59c/l in autumn.
For those Norco producers living south of Taree, the processor will pay them a base price of 49c/l in spring, rising to 57c/l in autumn.
However Dairy Connect farmer group president and Norco supplier Graham Forbes said that once bonuses and the Coles supermarket incentive of 3.2 cents a litre were added, most farmers would be getting “in the mid to high 60 cents a litre range”.
BEGA
Like Saputo, Bega Cheese has offered an average opening farmgate price in southern Victoria of $6.40 per kilogram milk solids.
However, in Bega’s northern Victorian catchment area, the processor is offering $6.55 per kilogram milk solids for the 2020-21 financial year.
Bega Cheese executive chairman Barry Irvin said it was still a very competitive arena for milk in southeastern Australia.
“The reality is that it’s been nice to see a bit of milk growth this year,” Mr Irvin said.
“But a lot of companies have still got spare capacity in their facilities, so competition for milk is strong.”
SAPUTO
Saputo has beaten Fonterra’s average opening farmgate price with a figure of $6.40 per kilogram milk solids.
In a letter to suppliers, management of the Canadian-owned processor said: “As you will be aware, this is an average across our supply base and milk prices achieved at an individual farm level may vary.”
Management noted exchange rates and international demand meant farmgate price projections were difficult to quantify at the start of the 2020/21 financial year.
BROWNES/BESTON
One of Western Australia’s three big processors, Brownes, has confirmed an opening price of $7.20 per kilo milk solids.
The cost of production is higher in the west, so the higher opening figure is not necessarily comparable to prices offered in the south-east Australian market today.
Beston Global Foods have also offered an opening price of $7.20 per kilo milk solids.
AUSTRALIAN CONSOLIDATED MILK
Australian Consolidated Milk have announced an opening farmgate price range of $6.30 to $6.90 per kilo milk solids.
Management have also confirmed an opening farmgate price average for organic milk at $8.60 per kilo milk solids and a figure for a2 milk of 56 cents per litre.
ACM commercial general manager Peter Jones said the opening price average across its supplier base was $6.60 per kilo milk solids for the upcoming financial year.
“Contracts have been mailed to our suppliers today,” he said. “Potential new suppliers are encouraged to register their interest (by visiting the ACM website). ACM will not engage with potential new suppliers until existing suppliers have been given the opportunity to agree to supply ACM.”
FONTERRA AND BURRA
FONTERRA has announced an opening farmgate price of $6.06 per kilo milk solids as processors nationwide outline their start for suppliers for the upcoming financial year.
Australian management of the Auckland-based processor have projected an estimated closing price range of $6.30 to $6.70 per kilo milk solids.
Meanwhile, Burra Foods have also revealed an opening price range of $6.00 to $6.40 per kilo milk solids in a letter to suppliers.
Fonterra Australia managing director René Dedoncker said the processor’s prices considered all factors including the uncertain market conditions caused by the coronavirus pandemic.
“Global commodity prices have softened and are back to early 2019 levels with GDT average prices between $2800 and $3000 USD a tonne,” he said.
“After considerable volatility, the Australian dollar has stabilised between US$0.64 and US$0.66 and we have based our pricing on this range.
“The impact of COVID-19 on economies and the market is still largely unknown and we are seeing softening of demand relative to supply which is putting downward pressure on prices.
“We anticipate that global dairy markets will be uncertain for some time. The global downturn is continuing to reduce consumers’ purchasing power while the food service industry remains impacted by restrictions in the tourism and the hospitality sectors.”
Meanwhile, Burra Foods chief executive Stewart Carson wrote to suppliers today to confirm a $6.00 to $6.40 per kilo milk solids opening price.
Mr Carson told suppliers the impact of coronavirus around the world had been “unparalleled in terms of impact on both global markets and world economies.
“However, one thing that does not change is that cows need to be milked, the milk needs to be collected and processed and dairy products have to be delivered to the market, which thankfully we have all managed to keep on doing,” he wrote.
“We understand as well as you do that the dairy industry can be extremely volatile at times and many of these external influences are out of our control.
“What we can do though is continue to build strong and reliable long-term partnerships that can underpin both our business and yours.
Mr Carson said the opening price range reflected current forecast market returns.
“It excludes any portion of milk solids committed to the Fixed Farmgate Milk Price (FFMP) and is an opening price that may increase by way of retrospective step-ups during the season,” he wrote.
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