Fonterra opens at $5.30

14 Jun, 2017 11:09 AM
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World dairy prices have strengthened, reflecting the strong fundamentals supporting global markets.

Fonterra Australia has announced an opening price of $5.30 per kilogram of milk solids (kgMS) for season 2017/18.

The processor has also announced an additional 40c kg/MS bonus payment, to bring its opening price to $5.70 kg/MS.

The price, including the bonus, is higher than other processors, with Bega and Warrnambool Cheese and Butter opening at $5.50/kg MS, Burra Foods at $5.05-$5.25/kg MS (or $5.45-$5.65 for those signing a three-year agreement) and Murray Goulburn at $4.70/kg MS.

The company also revised its forecast closing range to $5.80-$6.20 kg/MS for the 2017-18 season.

The additional 40 cents is being paid to all current, retired and recommencing Australian suppliers to fulfil the benchmark milk price agreement for the 2015/16 season.

It was announced after Murray Goulburn abandoned its Milk Supply Support Package (MSSP).

Fonterra Australia managing director René Dedoncker said the company had taken a responsible view in setting its opening price and forecast closing range, which reflected the improved product mix and the current commodities market.

“World dairy prices have strengthened, reflecting the strong fundamentals supporting global dairy markets,” said Mr Dedoncker.

“We’ve made significant investments in Australia and achieved a number of milestones for our business, including our multi-million dollar cheese plant at Stanhope, expanded capacity at our Cobden and Wynyard plants, and commencing our joint venture with Beingmate at Darnum.

“This has helped to rebalance our product mix, underpinning the price we can pay to our farmers."

Mr Dedoncker said to support Fonterra’s Stanhope investment and ensure it fully optimised the new plant, it needed to grow its milk pool.

“We believe that, when combined with our additional 40c/kgMS payment, our opening price will enable farmers to plan ahead and position their businesses to grow if they choose.”

Fonterra Australia’s opening price and forecast closing price range also reflected its commitment to provide clear and timely price advice to its farmers.

“Four weeks ago we announced our forecast closing range, six weeks out from the beginning of the season, to give our farmers an early indication of our price so that they could plan ahead,” Mr Dedoncker said.

“Our opening price and forecast closing range are a demonstration of our new way of working, with close engagement with the Bonlac Supply Company (BSC) to ensure we have input from our farmers.”

Individual suppliers’ milk prices would vary across Fonterra’s supply regions, depending on the individual farm’s milk profile, regional production factors, milk quality and farm management systems.

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