Milk price: Vague forecast fogs Fonterra

Last week Fonterra Australia announced a closing price forecast for next season, starting July 1, of $5.50-$6.20 a kilogram of milk solids.

Fonterra did not release an opening price for next season, saying it was due in coming weeks. It also hasn’t released a closing price for this season saying this was being reviewed.

Toora supplier Wendy Whelan said the large forecast was “too vague”.

“It is such a wide range, you can’t do anything with it,” she said. “It’s too broad, you can’t work out anything. If $5.50/kgMS is the average weighted closing price it could be $5.20/kgMS for some people.”

Nambrok supplier “Bruiser” Bermingham said the lack of clarity on the closing price was disappointing. “It is far too broad and gives the impression they are sitting on the fence waiting for the opposition to announce a price,” he said.

Fonterra announced a closing price range earlier in the season last year, before opening price, but the range last year was 40c/kgMS compared to this year’s 70c range.

Fonterra Australia milk supply general manager Matt Watt said given the business was now larger, it was more exposed to a fluctuating Australian dollar which would affect the next 12 months. When asked if the Fonterra price would increase if opposition milk processors came out higher, Mr Watt said: “That’s hypothetical … what we know is we need to be competitive in the market and we will deal with what comes,” he said.

Fonterra’s exports from Australia rose 26 per cent in March compared to the same month last year, while Fonterra’s milk collection in Australia was up 25 per cent in April.

Fonterra offered a 40c/kgMS incentive to suppliers last season, which attracted new milk. Mr Watt said this would not be offered next season. “We are keen to get back to a simpler version of the milk price, one milk price and what sits within that,” he said.

This comes as Gippsland’s Burra Foods became the latest dairy processor to offer farmers a price to lock-in a portion of their milk for three years. On Friday, Burra Foods told suppliers they could lock in a percentage of their milk at a flat $6 a kilogram of milk solids price for the next three years. Burra Foods has not released an opening farmgate milk price for next year.


Source: The Weekly Times


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