​Price issues key point at DA breakfast

22 Jun, 2018 03:19 PM
Comments
0
 
I don’t think that when the prices are up they are flowing through to the farmers as they should.

Questions around the failure to pass on the increasing value of global dairy trade to farmers and complex pricing structures were key topics at this year’s Dairy Australia Situation and Outlook breakfast.

A leading western Victorian dairy farmer has questioned the significant lag between Global Dairy Trade and farmgate prices.

And a Gippsland farmer called for processors to get rid of the average price, replacing it with a median figure.

Alanvale farm’s Garry Morrison said the GDT had gone up by nearly a third, in the last few years, to $4333 a tonne.

A Fonterra supplier, Mr Morrison asked the company’s managing director Rene Dedoncker why the processor’s estimated closing price, released a month ago, was still in the $5.60-$6.20 range.

“All that does is signal to the other processors,” Mr Morrison said.

“I am not a fool.

“How the hell can you come out and give that potential closing price, when for the last six months the average GDT has been the highest it’s been in six years?"

He said processors were still asking for farmers to trust them, yet better prices were not being passed through to farmers.

“You are not giving us the signals, to give us the price increases we need,” he said.

Mr Morrison said he was milking more than 3000 cows.

“I don’t think that when the prices are up they are flowing through to the farmers as they should," he said.

“If they want investment, we have to make money.”

Mr Dedoncker said processors also dealt with uncertainty.

“We have a lot of moving parts, in business, we need to manage as well,” Mr Dedoncker said.

The company had made some “regrettable” moves, in recent years, and wanted to avoid doing so again.

“Do we overthink some of this? Yes we do," he said.

“Do we wait until we have got more certainty? Yes we do.”

He said Fonterra had only just signed off on fixed contracts for the Japanese market.

“We have waited, as long as we could, to clarify and get confidence, around some of those positions," he said.

“The reality is I know you don’t like that, but that’s a reality for us.

“We have made an active choice, so it’s been intentional.”

Mr Dedoncker said he took advice from his commodity risk and trade and sales teams.

“I wouldn’t have changed that,” Mr Dedoncker said.

He said the company had sought to set up an “ecosystem”, which took risk out of the equation.

”We are trying to give ourselves more resilience and more opportunity, so that when we do get tough times, we don’t stand up and say ‘that’s a surprise, what are we going to do?”

Gippsland dairyfarmer, Chris Griffin, also called from more clarity around milk prices.

He applauded the United Dairyfarmers of Victoria push to clarify prices, saying it made a lot of sense.

But he said the loss of Murray Goulburn had caused greater uncertainty.

“That was the price setter, or the benchmark, for all companies for farmers to understand they were getting the price they should be getting, because they had a farmer board that was overseeing that,” Mr Griffin said.

"We haven’t got that now, in Victoria, so how do we, as farmers, know we are getting a true price for our product, now that the co-op is not there to benchmark off?

“We don’t know now because we haven’t got the oversight, we had previously.”

Page:
1
StockLand
Andrew Miller

Andrew Miller

is a journalist for Stock and Land
Twitter: @journoandy26

POST A COMMENT


Screen name *
Email address *
Remember me?
Comment *
 
Nestled away in a corner of Gunbower Island is the most northern dairy farm in the Campaspe Shire, owned and operated by Stephen and Brooke Brown, just a few kilometres out of Gunbower, Vic.
04 Jul 18 Nestled away in a corner of Gunbower Island is the most northern dairy farm in the Campaspe Shire, owned and...
Australia and New Zealand are known as predominantly pasture-based dairy systems.29 Jun 18 Australia and New Zealand are known as predominantly pasture-based dairy systems.
light grey arrow
This is rubbish compared to what was originally proposed
light grey arrow
The helmet requirement is plain stupid as is mandatory helmets on pushbikes - have a read of the
light grey arrow
Why does Adam insist on doing the biding of the processors? That is their line and he has
At the Dornauf family dairy at Moltema, Tasmania, one person can milk 600 cows.10 Jul 18 At the Dornauf family dairy at Moltema, Tasmania, one person can milk 600 cows.
Dairyfarmers around Australia have used grants to install new equipment in the dairy to help cut energy costs.
01 Jun 18 Dairyfarmers around Australia have used grants to install new equipment in the dairy to help cut energy costs.
Australian farm chemical manufacturer Nufarm has repaired its balance sheet and is now hunting for acquisition opportunities.25 Sep 16 Australian farm chemical manufacturer Nufarm has repaired its balance sheet and is now hunting for acquisition...
Monopoly market may confront cropping sector under mega-merger proposal.22 Sep 16 Monopoly market may confront cropping sector under mega-merger proposal.