Dairy processors' milk price battle

Dairy processors start low then lift to match competitors

PRICE STEP-UP: Colac-based Bulla Dairy Foods is the latest processor to announce a milk-price step-up.

PRICE STEP-UP: Colac-based Bulla Dairy Foods is the latest processor to announce a milk-price step-up.


Dairy processors flag further step-ups, after already increasing opening milk price.


Dairy processor Lactalis is the latest company to break $7 kilogram/Milk Solids price barrier.

Lacatalis, which produces Pauls, Oak, IceBreak, Tamar Valley and cheese brands, is offering northern Victorian and southern Riverina suppliers a weighted average price of $7.30 kilogram/Milk Solids.

For Gippsland and the west, the price is $7.15 kg/MS, while the sesonal supply figure is $6.90 kg/MS.

Tasmanian farmers will be offered a minium opening weighted average of $7.05 kg/MS.

The Victorian prices include a guaranteed 25 cents kg/MS.

Lactalis offer comes on the back of a third price increase by western Victorian dairy processor Bulla since it opened in mid-April.

Its now up 30c kg/MS since opening.

The Colac-based processor told suppliers it's now offering between $6.70 and $7.20 kg/MS, adding a further 20 cents on its last upgrade of 10c kg/MS.

It started with $6.40 kg/MS-$6.90 kg/MS in April.

"With strong competition of milk and improving market conditions, Bulla is accelerating some of our plans and increasing milk price to support several growth opportunities," Bulla dairy general manager Rohan Davies said.

"The revised milk price will benefit all existing suppliers and is also intended to support milk recruitment, across Victoria."

Mr Davies said the price was a guaranteed minimum, for the year.

"Step-ups will be announced, as business conditions permit," Mr Davies said, in a letter to suppliers.

It follows Saputo Dairy Australia's revision of its price, from an opening of $6.65 kg/MS, to a weighted average farm gate milk price of $6.85 kg/MS, last week.

Fonterra revised up to $6.85 kg/MS, with Burra Foods sitting on $6.40 - $6.80 kg/MS.

"SDA has published revised opening minimum milk prices in a standard non-exclusive Milk Supply Agreement (MSA) for the Southern Milk Region, with minimum prices representing the price we will pay monthly to suppliers for premium quality milk," a SDA spokesman said.

"Together, the monthly minimum prices and the additional payments described in our MSA (being the monthly milk quality bonus, monthly productivity payment, off-peak payment and monthly Northern Region payment) result in the weighted average farm gate milk price."

Read more:Saputo lifts its opening price as competition heats up

In a letter to suppliers, SDA director Anthony Cook said the minimum milk price for the Southern Milk Region had been increased by 12c/kg butterfat and 24 c/kg protein.

SDA was also making an additional payment of 10c/kg butterfat and 20c/kg protein for northern farmers.

"We are committed to reviewing our minimum milk price to ensure our pricing remains competitive," Mr Cook told suppliers.

"As always, we will continue to review our minimum price, on a quarterly basis, or if market conditions change, throughout the milk year."

He said the market dynamics in the northern region had changed, considerably, in recent years.

"Whilst this is not a decision we have taken lightly, we see it as a necessary step in response to changed market conditions and to ensure we remain competitive and attracting milk to our northern Victorian facilities."

And the Union Dairy Company has also "reassessed' its opening price, to $6.80c kg/MS.

Managing director Dean McKenna told suppliers that was to provide them with more certainty, for the upcoming season.

"It could be said that we were possibly too conservative with our opening price last week," Mr McKenna said.

"We believe the closing price is more important than the open, however, we are still very confident in the markets we operate in and believe there is still room for improvement as the season progresses.

"Additionally there are a few small improvements to our milk model that will improve the bottom line for a number of suppliers this season."


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