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Category: Agribusiness / Dairy Production / Food Processing / Food and Beverage / Company News

Australia's largest dairy processor reveals further cuts to milk prices

Tuesday, 28 Jun 2016 07:19:53 | Clint Jasper

Murray Goulburn suppliers will be bracing for a year of below-production cost milk prices. (Clint Jasper)

Embattled milk processor Murray Goulburn has slashed the price it plans to pay suppliers for the next season, to $4.31 a kilogram for milk solids (kgms).

By the end of next season, the processor has forecast that price will have risen to $4.80 kgms.

Dairy farmers have told the ABC the cost of production for a kilogram of milk solids is between $5.00 and $5.50.

Dairy processors in Australia forecast a price they plan to pay their suppliers at the opening of the season, and make regular adjustments to the forecast throughout the season.

Murray Goulburn is Australia's largest dairy cooperative, which under the leadership of former-managing director Gary Helou, had been promising to pay farmers $6.00 kgms, by the end of the current 2015/16 season.

Those hopes were shattered when Murray Goulburn entered a trading halt in early April before announcing it would slash the price to somewhere between $4.75 - $5.00 kgms.

A recent history of Murray Goulburn


ABC Rural takes a look at the events that led to Murray Goulburn's price slide.

In its latest disclosure to the ASX, the co-op did not reveal the closing price for the 2015/16 season, because the season hasn't finished.

In a statement to the ASX, interim CEO David Mallinson said low commodity prices had the strongest influence on the co-op's financial results.

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"In the face of these difficult market conditions, the forecast 2016/17 farmgate milk price reflects MG's view that commodity prices will continue to trade around current levels for the remainder of the 2016 calendar year."

The cooperative cited the Russian trade embargo, European dairy market deregulation and a downturn in demand from China as reasons it could not sustain its price earlier this year.

Rival dairy processor Fonterra followed quickly after, cutting the price it planned to pay suppliers from $5.60 to $5.00 kgms.

It sparked a wave of anger among dairy farmers, who took to the streets to protest against unsustainably low milk prices.

In a letter to its supplier shareholders, Murray Goulburn also announced a forecast full year 2016/17 net profit after tax (NPAT) of $42 million.

It's full year 2016 profit results will announced at the company's AGM in the next financial year.

AustraliaPlus


 

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