Dairy

Fonterra’s opening milk price questioned

by
June 20, 2017

Fonterra Australia has advised suppliers of an improved price as the dairy industry continues to pick itself up after last year’s price clawback.

Fonterra Australia has advised suppliers of an improved price as the dairy industry continues to pick itself up after last year’s price clawback.

The company announced an opening price of $5.30/kg MS for season 2017-18 as well as upgrading its forecast closing range by 10¢/kg MS ($5.40 to $5.80/kg MS).

Fonterra Australia managing director René Dedoncker said Fonterra had taken a responsible view in setting its opening price and forecast closing range, which reflected Fonterra’s Australian improved product mix and the current commodities market.

‘‘This is a responsible price in the current market,’’ Mr Dedoncker said.

‘‘World dairy prices have strengthened, reflecting the strong fundamentals supporting global dairy markets.’’

When coupled with Fonterra’s 40¢/kg MS additional payment, it means Fonterra suppliers can expect to receive $5.70/kg MS, meaning a higher price than that which fellow companies such as Bega have offered.

However, UDV president Adam Jenkins said this was not the case.

‘‘Fonterra has publicly announced an inflated opening price which does not reflect the current market price and is not available to new suppliers,’’ Mr Jenkins said.

‘‘The comments are nothing but misleading, and at a time when the dairy industry has committed to rebuilding trust along the supply chain, they are unhelpful in our effort to create a transparent milk price for the dairy industry.

‘‘Fonterra wants to give the appearance that they are offering a more attractive price than any of the other processors at $5.70/kg MS, but it’s simply not true and Fonterra and BSC (Bonlac Supply Company) need to make that clear.

‘‘Our industry landed in a very dark place 18 months ago for not reflecting the true market price in the farm gate returns and we do not want to land there again,’’ Mr Jenkins said.

Mr Dedoncker also said the opening price and the forecast closing price range reflected Fonterra’s commitment to provide clear and timely price advice to its farmers.

‘‘Four weeks ago we announced our forecast closing range, six weeks out from the beginning of the season, to give our farmers an early indication of our price so that they could plan ahead. Today we have upgraded that range,’’ he said.

Bonlac Supply Company welcomed Fonterra’s announcement and confirmed it was progressing towards a new milk price model for this season and beyond.

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