FOLLOWING Saputo’s announcement of a 20 cent step up in milk prices last week, Gippsland dairy farmers are anxious to find out when other processors will follow suit.
But Burra Foods’ milk supply team, on site at the South Gippsland Dairy Expo last Wednesday and Thursday, remained tight lipped about their next move.
Milk supply manager Peter Fort said farmers were eager to discuss the outlook for the season, to assist in budgeting for inputs such as grain, the cost of which has reached record highs in recent months.
But he said it was too early in the season for Burra to offer a step up from its $5.60 – $5.90/kg opening milk price range, and that Saputo’s step up, from $5.75/kg to $5.95/kg, wasn’t necessarily going to influence other processors.
“We’re only three months into the financial year, so it’s too early to make a call,” he said.
“Saputo started lower than other processors, so theirs is a bit of a catch up: their suppliers would’ve been the first to be calling for something.
“There is an expectation that the rest of us will follow suit, but a price increase depends on our global returns. The Aussie dollar coming down is a positive sign, but commodity export markets have plateaued. So, there’s no upside in price there.”
Mr Fort said suppliers could expect the usual two to three milk price increases throughout the season from Burra Foods and that the company was “working towards” a step up before Christmas.
“We’re doing what we can to find the next step up,” he said.
“Everyone in the business is working hard because we know the hard work that goes on before the milk gets to the farm-gate.”
Mr Fort said Gippsland farmers were “anxious and cautious” about what the season would bring, with a lot riding on good spring rainfall.
“The grain price is the biggest thing that’s worrying people, and if it stays dry, that puts extra pressure on top of the high grain price.
“It’s pretty difficult. And there’s not a lot you can say to reassure people. Just keep up to date with your cash flows and budgets, keep an eye on your production, keep your estimates accurate.”
But the mood around Burra Foods was more optimistic, with a number of positive developments over the past 18 months, including last December’s announcement of a $24.5 million expansion.
Milk supply officer Paul Bills said the company had “outgrown the factory” on Station Street and had for the past 18 months been leasing office space on Korumburra’s Commercial Street to accommodate over 30 extra milk supply, sales, logistics and IT staff.
“The business has grown significantly. We’ve expanded our domestic and export markets and we’ve nearly doubled our staff in past two to three years,” Mr Bills said.
“We’re operating 24/7 now and any functions that aren’t critical to operations have moved down [to Commercial Street].”
Mr Fort said Burra Foods had also done well to maintain its milk supply volumes in what had been a turbulent time for processors.
“There’ve been massive changes: a lot of people have been changing processors and there’s been an increase in competition for milk in Gippsland.
“A lot of processors, like Lion and Bulla, have come into Gippsland because of the reliability of supply and because production’s down in northern Victoria.
“We’ve had a few retirements and a few suppliers who’ve changed processors, but we’ve been able to replace the milk we’ve lost,” he said.