Fonterra has increased its opening milk price offer to remain competitive

Fonterra has revised its season opening milk price with a substantial price increase now on offer to its suppliers.

Fonterra has revised its opening milk price. Picture Chris Kidd

After announcing one of the lowest opening milk prices of the season on Monday, milk processor Fonterra has now moved to significantly increase its offer to dairy suppliers in an effort to stay competitive.

Fonterra Australia has advised its farmers that it will now pay $6.40 a kilogram of milk solids, a substantial increase compared to the average opening price of $6.06kgMS it announced on Monday.

The company’s price is now in line with rival processor Saputo Australia, which is also offering a $6.40kgMS opening price.

Managing Director Fonterra Australia, René Dedoncker, said that Fonterra had kept in line with industry convention to open at a price lower than the full-year forecast, with the understanding that step-ups would be paid throughout the season where the market supports it.

“Clearly though, our opening price needs to be competitive,” he said.

“We said we would review our pricing in June, and we have brought this forward due to the competitive environment we are in, which is what is driving this price. Our revised opening price fits at the lower end of our original full-year forecast and is aligned with our business plans for the year ahead.

Mr Dedoncker said that the impact of COVID-19 on economies and the market is still largely unknown and will be uncertain for some time.

He said consumers’ purchasing power is reduced and the food service industry is still being remains impacted.

The minimum price, as set out in Fonterra’s base and seasonal rates table, has been adjusted to reflect the revised pricing.