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New processor makes a splash
June 21, 2013

AUSTRALIAN Dairy Farmers Co-operative (ADFC) has entered the market with a bang, setting opening milk prices of $6.20 a kilogram of milk solids in a bid to attract new suppliers.

The price has topped announcements by other major players this week.

ADFC, the newly-established arm of Dairy Farmers Milk Co-operative, recently signed a deal with a fresh milk processor for 20 million litres.

With interest from about 60 Victorian dairies, ADFC chief executive Greg Griffith said there had been “pain at the farmgate” due to the poor cashflow and farmers were seeking better options.

The announcement follows independent processor United Dairy Power season opening of $6.05/kgMS, while three major dairy processors set opening prices for the next milk season of $5.60/kg or slightly above.

UDP managing director Tony Esposito said about 80 per cent of the company’s suppliers would be paid in that range, and predicted a season average in the $6.30-$6.40 range.

“It’s all value added and it’s all domestic, so the fall in the dollar has made no difference to us,” Mr Esposito said.

UDP supplier and Farmer Power organiser Chris Gleeson of Crossley criticised the major processors for not paying a fair and sustainable price.

“If (UDP) can pay it, why can’t the others?” Mr Gleeson said. “This is the sort of price that the major processors should be paying.”

Murray Goulburn got the ball rolling with the first opening price, giving suppliers the option of a $5.47/kg opening price or $5.60/kg if they take their first step-up early.

Bega Cheese will not declare its opening price until after a board meeting next week.

Warrnambool Cheese & Butter (WCB) announced a weighted average price of $5.65/kg on Friday – 25 per cent higher than opening prices last year.

WCB managing director David Lord said the forecast price range for the full 2013-14 year was $5.90-$6.10/kgMS.

Mr Lord said significant improvement in world dairy prices, which had reached historically high levels, and the drop in the value of the Australian dollar had given the company a confident outlook for at least the first half of the 2013-2014 season.

WCB also announced a final step-up in its milk price for the current 2012-13 season of 6c/kg for butterfat and 15c/kg for protein to take its final average milk price to $5/kgMS equivalent.

The payment was retrospective and applied to milk supplied from July 1, 2012.

Fonterra opened at $5.60/kg, which managing director Judith Swales said the company was pleased to reflect the improved market conditions with its strong opening price.

She said Fonterra would extend the opportunity for suppliers to access six-month interest-free advances until September 30.

Fonterra also announced a step up of 4c/kg of fat and 10c/kg of protein for milk supplied in the 2012-13 season for Victorian and Tasmanian suppliers.

United Dairyfarmers of Victoria president Kerry Callow said dairy processors needed to keep good step-up price increases coming as quickly as possible throughout the forthcoming milk season to help farmers get over what had been “a doozie” of a year.




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