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Australian Dairy Farmers welcome Fonterra’s Farmgate Milk prices
May 11, 2017

Tasmanian dairy farmers have welcomed Fonterra Australia’s forecast for farmgate milk prices next season, saying it is a step in the right direction after the 2016 dairy crisis.

Under the 2017/18 forecast, Fonterra suppliers will receive between $5.30 and $5.70 per kilogram of milk solids.

TFGA Dairy Council chairman and dairy farmer Andrew Lester said the price forecast showed goodwill.

“It’s a lot better position than recent years,” Mr Lester said.

Legana farmer Joe Hammond, whose dairy farm supplies 190,000kg of milk solids to Fonterra, had already planned to expand next season but said Wednesday’s announcement would make that easier.

“For 2017/18 we already had plans to increase production, so that is not based on the announcement, but it’s going to be good for us because we had already planned to buy extra cows,” Mr Hammond said.

Fonterra’s additional payment of 40 cents per kilogram of milk solids would encourage dairy farmers to invest in their businesses.

“The 40 cents on top gives people the chance to get back on an even footing. They can take it in advance to put towards income for next year,” Mr Lester said.

“I do like that it’s focusing on going forward, not on the past, so if you want to you can produce more and grow more,” Mr Hammond said.

Despite the forecast being praised, Fonterra’s price drop in May 2016, after Murray Goulburn’s drop in April last year, was still fresh in many farmer’s minds.

“What happened last year wasn’t great and this goes some way to repairing that,” Mr Hammond said.

“I think on the whole it’s a good thing. The forecast price seems about right. Other industry experts have made similar forecasts,” he said.

“There’s been a lot of confidence lost in the two major processors and it won’t come back overnight. People are still raw from their actions last year, and I think rightly so,” Mr Lester said.

The Hammonds will finish the 2016/17 dairy season about five per cent down on the year before as a result of the price drop.

“It was fairly devastating. To be tracking along 10 months into the season thinking you’re making a reasonable profit, it’s a pretty hard pill to swallow,” Mr Hammond said.

“That was a tough couple of months trying to figure out what we were going to do. The only positive was that we had to look at our business; things had crept in that didn’t need to be there.

“It probably stifled my ambition to grow at the time,” he said.

With six weeks left of the 2016/17 dairy season, farmers are cautiously planning what is ahead.

“The only thing now is, what is [Fonterra’s] opening price? I’d still like them to open as high as possible. I think $5 or $5.20 is a good opening price,” Mr Lester said.

“I’ve never wanted to do anything else other than dairy farming. I still think the dairy industry is a great industry to be in. It’s just unfortunate that last year happened,” he said.

 

Source: The Examiner


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