FIRST Saputo, then Fonterra and now Burra Foods have come out with welcome step-up payments for the milk supply season which is in full swing locally.
Conditions in South Gippsland have so far been favourable to pasture growth and milk production with farmers busy not only with milking but also with silage conservation, as a hedge against high grain and feed prices.
Suppliers of Saputo Dairy Australia welcomed a 20 cent step up in milk prices on or about September 20, Fonterra was next on October 10 with a 13 cents per kilogram of milk solids (kgMS) increase, bringing Fonterra’s average farmgate milk price up to $5.98kgMS and Burra Foods following on Tuesday, October 16 with 13 cents per kilogram of milk solids also.
Fonterra also revised its top-end forecast closing milk price range to between $6.10kgMS and $6.20kgMS for the 2018/19 season.
Fonterra Australia Managing Director René Dedoncker said the increase will help support its farmers who are facing challenging conditions.
“Rising costs for feed and water due to the drought means that cashflow is even more critical for our farmers. Receiving this increase in their milk payment now, rather than later in the season, will help our farmers make important decisions on input costs and plan for the remainder of the year.
“This milk price is reinforced by our strong Australian business which is performing well and generating repeatable returns, and is supported by tightening domestic supply of milk and the weakening Australian dollar.”
However, Mr Dedoncker also noted that market conditions were putting downward pressure on the upper end of the forecast range announced in May.
“A weaker currency has only partially offset the impact of an increase in production this season in some other dairy-producing countries. As a result, we have revised our forecast closing average milk price range to $5.98 to $6.10kgMS, down from $6.20kgMS.
“While it’s disappointing to have a reduction in the forecast closing price range, it’s important that we provide our farmers with clear, early signals on how the market is likely to impact the farmgate milk price.
“We continue to monitor currency and global dairy prices closely and will keep our farmers updated throughout the season with the latest market conditions,” said Mr Dedoncker.