Gippsland processor Burra Foods has been the latest company to announce its opening milk price of $4.40 to $4.60kg/ms, cutting a dollar after last year’s payment.
Burra chief executive Grant Crothers said the company had made the announcement earlier than usual, to help farmers make key commercial decisions for the coming year.
“We are looking forward to seeing the industry return to a ‘base price plus step ups’ pricing structure for the next financial year in stark contrast to FY15 and FY16 where ‘no step up’ years were becoming the industry norm,” Mr Crothers said.
He said the price had been set to be sustainable and realistic, with the potential for step ups, as the market dictated.
Bega Cheese and Tatura Milk suppliers have been told their opening price would be $5kg/ms, down 11 percent. Australian Consolidated Milk announced an opening milk price of $5.30kg/ms while Warrnambool Cheese and Butter was first to announce an opening price on June 10, with $4.80 kg/ms.
Murray Goulburn and Fonterra are yet to announce their opening price.
A Murray Goulburn spokeswoman said it would make an announcement before the end of June, in line with its usual practice.
Mr Crothers said while not immune to the commodity slump, Burra’s business model had proven robuse enough to avoid following other processors, with step downs on this year’s price.
He said the decision not to apply a step down saw Burra Foods inject about $5 million into its supply pool and the raw milk supply-chain in Gippsland.
“The challenging seasonal conditions have meant that the majority of our supply base have experienced lower than expected returns and given these challenges I was determined to ensure that our supply partners have as much advance notice and transparency on milk pricing as possible so to prepare for the season ahead, “ Mr Crothers said.
“We will now work with our supply partners to ensure they have accurate cash flow forecasts to empower them to make the best possible ‘on-farm’ management decisions required,” added Mr Crothers.