Major milk processor Murray Goulburn has lifted its opening price for the 2017-18 season from $4.70/kg milk solids to $5.20/kg and increased its forecast range of prices for the season.
The company, which has come under sustained criticism from suppliers for the low opening price, has lifted the upper end of the forecast, taking the range to $5.30/kg to $5.50/kg.
In a statement last week the company said the first price was earlier than in previous years in order to try to assist suppliers with budgeting and business planning.
Since then, Murray Goulburn 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 about 2.5billion litres.
The company said the updated price has also taken into account improved commodity prices reflecting anticipated market returns, together with additional contracted sales.
‘‘MG recognises that in the current competitive environment it needs to maintain milk supply and provide improved cash flow for suppliers,’’ it said.
‘‘The decision to revise the opening price to $5.20/kg MS is intended to assist in maintaining competitiveness and support the supplier base.’’
Some suppliers have been threatening to leave the company because of the pricing announced this month.
The company also announced the start of a strategic review which will look at all aspects of MG’s strategy and corporate structure, including the profit sharing mechanism and capital structure.
Chief executive officer Ari Mervis has promised an update on the strategic review at the time of MG’s full-year results in August.
UDV president Adam Jenkins said Murray Goulburn had made a sensible decision to step-up its milk price after listening to its supplier base.
‘‘They’ve taken a positive step forward, but many farmers across Victoria are still recovering from last season’s milk price cuts,’’ Mr Jenkins said.
The UDV has urged processors to pass any upward movements in the milk market onto farmers, with many farm businesses expected to remain challenged into the new season.
‘‘We’re encouraging farmers to do their own numbers on their own farms with their own system and processors,’’ Mr Jenkins said.
Source: COUNTRY NEWS
