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Australia’s Dairy Farmers Being “Milked” Dry
June 29, 2016

Dairy farmers say they’re being milked dry after Australia’s largest dairy producer slashed milk prices for a second time in two months. 

Murray Goulburn announced on Tuesday an opening price for the 2016/17 season at $4.31, leaving farmers ‘gutted’.

Murray Goulburn slashed milk prices in April to between $4.75 and $5.00 per kilogram of milk solids, down from $5.60.

‘They were gutted by the first decision and now they’re numb at this decision,’ United Dairyfarmers of Victoria president Adam Jenkins said on Tuesday.

Dairy farmers are still carrying the weight of MG’s poor management decisions that’s led to the debt they’re being forced to repay on the back of this low opening milk price,’ Mr Jenkins said.

David Basham, acting president of advocacy body Australian Dairy Farmers, told the Sydney Morning Herald that farmers would now face a whole year of being paid less for their milk compared to the cost of producing it.

‘This is going to be really tough for the Murray Goulburn farmers – it’s going to be below the cost of production for the majority of them,’ Mr Basham said.

‘We think that about $5 to $5.20 is about where cost of production is in the current environment and this is a good way below that.’

Murray Goulburn said it eventually expects to pay dairy farmers $4.80 per kilogram over the upcoming season, with prices set to rise slightly from the opening price.

‘This is a conservative price, and it’s most likely that MG is erring on the side of caution, but it opens up the possibility of stepping up to a more reasonable price later in the season,’ Mr Jenkins said.

Murray Goulburn chief executive David Mallinson said key commodity prices had been low for almost two years – much longer than historical price downturns.

‘Global conditions have not improved, and the latest data suggests excess global inventories, including the impact of European intervention, may have surpassed the equivalent of six billion litres of milk,’ Mr Mallinson said.

‘We have set a robust forecast, and while there are a number of areas which may provide upside to our FY17 forecast, we do not believe it is prudent to include these in our forecast at this stage.

Australia’s largest dairy producer is forecasting a net profit after tax of $42 million for 2017 in an update to the market on Tuesday, two-thirds of which will go to farmers under the a profit-sharing deal.

The federal government has provided loans of up to $1 million or 50 per cent of the existing commercial debt of the business over 10 years to help out farmers.

Source – Australia Online News


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