Fixed Base Milk Price is a price risk management tool that lets farmers lock in a set price for up to 70 per cent of the season’s milk before the season starts, which the company says provides a greater price certainty by helping to reduce farmers’ exposure to market volatility.
Fonterra Australia’s Farm Source general manager Matt Watt said the strong interest in the Fixed Base Milk Price showed farmers were looking for greater price certainty to help them better plan.
‘‘Certainty can be particularly important for farmers at times when they are considering business investments such as expansion or undertaking a new conversion,’’ Mr Watt said.
‘‘Fixed Base Milk Price is a bit like having a fixed interest rate on your mortgage versus a floating rate. It enables you to know exactly where you stand with a percentage of your production and this can help with future planning and the ability to manage margins.
‘‘It’s another tool we’re providing under our Farm Source offering to deliver greater price certainty to farmers so they can focus on running their own business, and complements other financial tools we provide to farmers such as the Farm Source income estimator.’’
To determine the volumes and prices of milk solids under Fixed Base Milk Price, Fonterra used a tender allocation process whereby farmer suppliers offered certain volumes of milk solids at a set price, which Fonterra then worked to match to customer demand.
■Saputo, the new owner of Murray Goulburn, has announced a further step-up in farm gate milk price for the 2017-18 season for all suppliers in the Southern Milk Region and NSW.
The increase of 5¢/kg butterfat and 11¢/kg protein takes the average farm gate milk price to about $5.68/kg, up from $5.60/kg, retrospective from July 1, 2017.
■Kyabram-based Australian Consolidated Milk has announced a 2018-19 farm gate milk price of $5.90/kg milk solids, up 10¢ on this season’s closing price.
Suppliers committing to lock in part of their milk supply at a fixed price for three years are being offered a higher price.
Organic milk suppliers are also being offered a higher price.
Source: Country News