Farmgate milk prices revealed

Murray Goulburn has revealed a record opening price of $6 a kilogram milk solids, which will be paid to its Southern milk pool suppliers this coming season.

This is a seven per cent improvement on the 2013-14 price.

MG has also said it expects the 2014-15 closing price range to be $6.15-$6.30/kgMS.

“Devondale Murray Goulburn’s opening price reflects the ongoing positive impacts of our strategy focused on operational excellence and innovation,” Mr Helou said.

“We have driven efficiencies in our supply chain and created more innovative dairy foods in domestic and international markets.

"In additon we have built two state-of-the-art daily pasteurised liquid milk plants in Melbourne and Sydney which commence supplying consumers from July this year.”

Despite the softening in global price, Mr Helou said MG had been able to deliver the highest opening milk price on record and one of the highest year-end forecasts on record.

"This is due to our balanced portfolio of ingredients and retail products and our hard work towards improving business performance and growth."

For Victorian and Tasmanian Fonterra suppliers, they will be paid an opening price of $5.80/kgMS, slightly less than MG suppliers.

But its forecast closing price was expected to be in a similar range at $6.10 to $6.30/kgMS.

Fonterra Australia managing director Judith Swales said the announcement continued the company’s price leadership from the 2013-14 season into the next.

“We are committed to the profitability of our suppliers and know that consistent, strong price performance is a key part of this – that’s why we are continuing our leadership into the 2014-15 season with our opening price,” she said.

“I know our opening price will help our suppliers lock down their business plans for the next 12 months.”

She had expectations that market factors would continue to influence prices through the 2014-15 season.

The global environment remained volatile.

“We have recently seen global commodity prices decrease due to increased global production and our currency has appreciated. But, demand from key importing countries remains strong.”

Ellinbank dairy farmer Ron Paynter, who is a Fonterra supplier, described the price range as "reasonable".

“The closing price is no surprise,” he said.

“We had been warned about that.”

Mr Paynter said he had been listening closely to industry analysts, who said farmgate milk prices would be lower due to overseas dairying regions ramping up production.

“It’s still a healthy price – and it is good to have an opening price announced now,” he said.

“It will give farmers more certainty for this coming financial year.”

The tendency for dairy processors to wait until the last minute before making the opening price announcement had been a frustrating trend, he said.

“Farmers need clarity before the financial year starts,” he said.

“They need to plan their budgets, so they really need to have that indication of what they will be paid.”

Mr Paynter said the solid opening price would help him catch up on maintenance around the farm.

“The big one for us maintenance on tracks and laneways…we’ve put that off over number of years and are starting to see the downside,” he said.

At the moment, he is milking 290 cows, which is up on previous years.

“The saving grace for us is that we’ve got hectares of beautiful grass,” he said.

“We had a shaky start, but since then it’s been a great season and we are producing more milk this time of year than ever before.”

His split-calving herd was averaging a healthy 19-20 litres per cow.

“The big issue the industry faces is that unknown,” he said.

“It would be lovely to have a crystal ball now to see what prices will do in the following 12 months.

“I’m wary we might be seeing top of the cycle, and that prices could plunge in that next season.”

He said farmers should be capitalising on the good prices while they can.

Bonlac Supply Company (BSC) chair Tony Marwood also welcomed the announcement from Fonterra Australia.

“It’s great to see Fonterra Australia open with a strong price again this year,” he said.

Fonterra Australia also advised that its forecast closing range for the 2013-14 season remains unchanged despite recent challenging commodity and currency movements.

Warrnambool Cheese and Butter has not announced a price yet.