MG ups opening price to $5.20

22 Jun, 2017 08:56 AM
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MG recognises that in the current competitive environment it needs to maintain milk supply ...

BREAKING: Murray Goulburn (MG) has increased its opening price to $5.20 a kilogram milk solids (MS).

The company also announced a higher end of year forecast price of $5.20-$5.50/kg MS.

The company said the new $5.20 opening price included the reward program and other incentive payments.

It said the decision to revise the opening price "is intended to assist in maintaining competitiveness and support the supplier base".

MG initially announced an opening price of $4.70/kg MS on June 6 - earlier than in prior years "in order to try to assist

suppliers with budgeting and business planning".

But other processors followed with substantially higher prices.

Bega, Warrnambool Cheese and Butter (WCB) and Midfield all announced an opening price of $5.50/kg MS, while Fonterra opened at $5.30/kg MS and Burra Foods opened at $5.05-$5.25/kg MS.

The industry has subsequently been awash with talk of a massive movement of milk suppliers from MG to other processors.

MG said on Thursday it "has had the opportunity to review the 2017/18 budget assumptions, which include dairy commodity prices, exchange rates and achieving cost out initiatives, as well as achieving milk intake of approximately 2.5 billion litres.

"The updated FMP has also taken into account improved commodity prices reflecting anticipated market returns, together with additional contracted sales."

It appears the potential loss of milk supply was going to hurt MG's position.

"MG recognises that in the current competitive environment it needs to maintain milk supply and provide improved

cash flow for suppliers," it said in its announcement.

"The decision to revise the opening price to $5.20/kg MS is intended to assist in maintaining competitiveness and support the supplier base."

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READER COMMENTS

Chris
22/06/2017 9:53:01 AM, on Australian Dairyfarmer

Who gets confidence out of " Budget Assumptions "?. I am only left to wonder if re-constituted powder from storage will make up the litres ??

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