A Victorian dairy representative group reports Fonterra’s opening price, announced today, isn’t “as bad as we expected”.
United Dairyfarmers of Victoria president Adam Jenkins said the Victorian dairy industry welcomed Fonterra's next season opening milk price of $4.75 per kilogram of milk solids, but warned it fell well below the cost of production for most farmers.
“This price isn’t as bad as we expected, but it’s still extremely disappointing that it’s taken so long for Murray Goulburn (MG) and Fonterra to announce their opening prices,” Mr Jenkins said.
“Let’s face it – these two processors made unethical decisions which have left a significant portion industry in Limbo for the last 12 weeks!”
UDV is again calling for greater transparency around the pricing system to build resilience and confidence in farm businesses.
“Dairy processors send letters to all their suppliers to let them know their opening milk prices, but these are far too complicated for anyone to decipher,” Mr Jenkins said.
“We’ve been calling for transparency around the weighted average milk price system for the last three years, because a significant portion of the industry receives substantially less than the weighted average price.
“Fonterra has announced an opening price of $4.75kg/ms, MG has announced a price of $4.31, Burra Foods is $4.50, Warrnambool Cheese and Butter is $4.80 and Bega is $5, but the reality for some farmers is that they’ll be getting an on-farm opening price as low as $3.90.”
UDV is calling on dairy processors to ensure all farmers receive income estimations and a follow up visit.
"We still have people who have not been contacted since the price drop some weeks ago," Mr Jenkins said.
UDV is encouraging farmers to make the most of the Taking Stock and Tactics for Tight Times programs, available through local regional development programs including WestVic, Gippsdairy and Murray Dairy.
Social and information events are also being organised in dairy regions across Victoria.
“We are working hard with the State and Federal Governments to ensure the right resources are put in place,” Mr Jenkins said.
“The ACCC and legal teams have also been consulted for advice on removing unethical clawback options from supplier contracts.
“The overwhelming consensus from the dairy industry is that we need to get rid of clawback options so that this situation never happens again.
“I’m not aware of any other agricultural industry that applies a contractual clause to allow processors to grab back profits from suppliers if it’s been a bad year.”
