Australian Dairy Farmers Co-operative (ADFC) today announced announce its opening farmgate milk price for the 2015-16 financial year at $5.87 a kilogram of milk solids (kg MS).
The opening milk price will apply to ADFC suppliers in South West Victoria who supply Bulla Dairy Foods and ADFC suppliers in Northern Victoria who supply Procal Dairies.
“Despite the tough market conditions, we are happy that we can offer a premium price that is fair and competitive,” said ADFC chairman Scott Sieben.
“We have worked closely with our partners Bulla and Procal to achieve a milk price that is above the major processors. We are very happy with the outcome and we will continue to work hard to ensure we maximise returns for our farmers,” Mr Sieben concluded.
Murray Goulburn Co-operative, Fonterra Australia, Warrnambool Cheese & Butter, Tatura Milk Industries and Burra Foods have all in recent weeks announced an opening milk price of $5.60/kg MS. The same opening for the upcoming season suggests strong competition between the major processors to secure supply.
The processors pointed a more cautious opening price and forecast closing price range reflected the volatile global dairy prices, which Tatura Milk Industries executive chairman Barry Irvin said had seen prices drop some 34 per cent when between June 2014 and June 2015.
Representatives from the companies were also united in their hope that global dairy prices would improve, particularly in 2016, and the Australian dollar would continue to soften.
Fonterra Australia management also announced a forecast closing range of $5.80 to $6. A spokesperson said despite the short-term volatility, the longer term fundamentals remained positive for Fonterra, with the planned joint venture with leading Chinese infant formula manufacturer Beingmate at its West Gippsland Darnum site central to Fonterra's multi hub strategy to make Australia its hub for cheese, whey, and infant nutritionals.
Murray Goulburn (MG) announced its southern milk region's opening price of $5.60kg/MS - which is its second highest opening price despite market volatility.
MG re-confirmed the forecast full year available weighted average southern milk region farmgate milk price of $6.051 kg/MS, which if achieved will be an increase on the 2014/15 forecast closing price and will result in MG suppliers receiving total farmgate more than $6 kg/MS for the third consecutive year - a new record for MG.
MG's managing director Gary Helou said the resilient pricing reflected MG's product mix being shifted away from commodity products to less volatile premium quality ready to consume dairy foods.
"Combined with our continuing focus on reducing cost in the business and driving efficiencies, the execution of this strategy has supported MG's ability to pay a strong FMP," Mr Helou said.
"With the capital restructure nearing completion; we are well on track for the funding to be in place to build world-leading manufacturing capacity and capability in the key growth categories of dairy beverages, consumer cheese and nutritional powders to advance the next phase of our strategy.
"These capital projects, once operational, will produce value-added, dairy foods which will help to further enhance the value of MG's milk pool."
Burra Foods is also on board the $5.60 kg/MS opening milk price, which chief executive Grant Crothers said was the second highest in recent history.
He said Burra Foods was also focused on producing higher value dairy ingredients that were less susceptible to market fluctuations.
Mr Crothers said that Burra Foods would handle around 300 million litres of milk this year, up from about 265 million litres in the 2014/15 year, supported by its agreement this year to purchase United Dairy Power's milk depot in Poowong.
In a letter to WCB suppliers, general manager Richard Wallace said its $5.60/kg MS was strong considering global volatility.
"In this environment average closing prices in the 2015/16 season are difficult to predict and will be dependent on many external factors. If market conditions improve in the short term, average closing prices could be up to $6/kg MS," he said.