Milk price: Parmalat offers two year contracts

In a letter sent to suppliers yesterday Parmalat senior milk supply manager Malcolm Fechney said the two year contract included a “weighted averaged full season floor price of $5kg MS”. He explained that in “addition” to this floor price there would be a “contract incentive” of 40c/kg MS paid each year with a 20c/kg MS lump sum to be paid in August “to assist with cash flow and the balance paid throughout the year”.

“We also make the commitment to ‘meet the market’ with the market defined as the Victorian weighted average of Fonterra, Saputo, Bega and Burra,” he wrote.

The letter said this “guaranteed” a minimum price (weighted average) for 2018-19 and 2019-20 and if the market was higher, Parmalat would lift its price to match the market.

Parmalat’s current “benchmark pricing” is $5.70kg MS.

The Parmalat letter comes after Bega Cheese last month told suppliers it would extend its current milk pricing until the end of September.

The move, described to provide suppliers with “price stability” for the start of the coming season beginning July 1, would mean Bega Cheese pays the same price for milk this July, August and September as it did last year.

A loyalty payment in September will be on top of this.

By: SIMONE SMITH

Source: The Weekly Times

Link: https://www.weeklytimesnow.com.au/agribusiness/dairy/milk-price-parmalat-offers-two-year-contracts/news-story/4e2194521c79766159e418e6f51309f1

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