Fonterra Australia has increased its average farm gate milk price by ten cents, to $5.20 kilogram/milk solids (kg/ms).
The decision has brought Fonterra to its forecast closing price, after its last step up in October.
Fonterra Australia managing director René Dedoncker said the revised price reflected improvement in the global commodity markets and progress on key initiatives for the Australian business.
“Production has fallen across the major exporting regions, particularly Europe and New Zealand, and we’ve seen a significant decline in Australian milk supply,” Mr Dedoncker said.
“This has helped to rebalance global supply, while demand has remained firm.
“As a result there has been a steady improvement in global dairy commodity prices and this is reflected in our farmgate price.
Mr Dedoncker said Fonterra’s strategy continued to progress, helping the co-operative to rebalance its product mix, to generate higher returns, which it was delivering to farmers.
He said key initiatives included:
• Strong growth in the ingredients business, with almost 1,000 containers of cheese, whey and nutritionals exported to key global customers across December and January,
• The construction of a multi-million dollar Stanhope cheese plant and expansion of the Cobden coolroom were also progressing well. Stanhope was on track for completion in mid-2017, and the Cobden coolroom would be ready to accommodate growth in Western Star from April.
• The Beingmate joint venture at Darnum was up and running, with the first product made under the joint venture now rolling off the line destined for China.
“The progress we’ve made on our strategy, coupled with improvements in the global dairy market, has enabled us to deliver this step up to our farmers,” Mr Dedoncker said.
“Individual suppliers’ milk prices will vary across Fonterra’s supply regions, depending on the individual farm’s milk profile, regional production factors, milk quality and farm management systems.”
