AS MUCH as you can warn of an impending doom, it’s often only when disaster arrives on your doorstep that reality really sets in.
And that was certainly the case for many Murray Goulburn suppliers last Wednesday, June 15, when the first of their milk supply statements, under the new crisis-pricing regime, arrived.
So the Sentinel-Times went back to local MG suppliers, Terry and Janine Clark of Nerrena, who made international news last month over the impact of the milk price fall, to gauge their response.
They revealed details of what has been a triple-whammy for them and their dairy farmer colleagues.
“We’re down about $12,000 for the month compared to May last year,” Terry said.
“Of course the price this year is lower overall than it was but we supplied pretty much the same amount of milk this May as May 2015; 125,000 litres for the month last year and 124,000 litres this May, so it’s a big drop for sure.”
The milk cheque which arrived last week was payment for milk supplied in the month of May, the first to be affected by the price cut detailed by Murray Goulburn in the wake of its shock announcement to the Australian Stock Exchange on Monday, April 27, 2016.
“In May 2015, the payments were based on $4.23 per kg butterfat and $9.30 per kg protein. Now it’s $3.38 kg/bfat and $7.42 kg/protein which equates to $5.49kg/milk solids as compared to the opening price
“But that doesn’t include the amount to be recovered via the Milk Supply Support Package (MSSP). In fact, the May cheque actually increases the amount they are wanting to claw back.”
Murray Goulburn has previously announced an intention to claw back between $170 million and $220 million from its suppliers over the next three years.
As disappointing as the June milk cheque was for suppliers, it wasn’t their only concern.
“A couple of weeks ago we were also advised that we could pay the amount we owe through the MSSP in a lump sum.
“Ours is $100,000 and if we want to take advantage of the early payment offer, we’d have to do it by June 24.
“But we simply don’t have that sort of money.”
Asked what they would have to pay over the three years if they opted to pay-as-you-go, Terry said he frankly didn’t know.
Are some people borrowing at the low interest rate levels to pay the debt?
“I have heard that and if you’re looking at dramatically increasing supply, it could be better to pay it upfront as a lump sum.”
On top of the low milk cheque last week and the advice of MSSP debt for each supplier, Terry said some deferred expenses had also come home to roost for suppliers.
“You can defer payment on things you buy from the store, such as the hay purchased during the dry months and pasture seed (for pasture renovation) for up to three months, so those bills could have come in as well,” Terry said.
The one saving grace, and it’s an important one, according to Terry, is the price of chopper cows.
“We had a pen of eight choppers, straight out of the yard, we sent last week, which made an average of 247c/kg or $1540 a head which is exceptional.
“It’s a high price and something you wouldn’t expect to see. Every time I remember there being a downturn in the milk price, the value of chopper cows has been decimated as well.
“It definitely makes a difference.”
Alex Dixon, a stock agent with Elders Korumburra, said the prices paid for chopper cows at VLE Leongatha last week were some of the highest prices ever.
“We’re aware that the farmers are getting their first milk cheques since the price cut and if we can deliver a bit of good news, with a phone call about the prices achieved for their choppers, it’s a call you’re happy to make,” Mr Dixon said.
No news isn’t good news
Meanwhile there has been no word from Murray Goulburn on when they are likely to announce their opening price for 2016-17 after Warrnambool Cheese and Butter stumped up an opening the previous week of $4.80kg/solids, as compared to $5.60 last season.
There are also moves afoot to force MG to call a general meeting to discuss issues of interest to dairy farmer suppliers well prior to the annual general meeting later in the year.