After concerns Murray Goulburn’s conservative opening milk price would leave some suppliers struggling with debt accumulated in last year’s terrible season, the company has raised its opening price.
Last week, Murray Goulburn announced its opening price would increase by 50¢ to $5.20/kg milk solids, which includes the reward program and other incentives.
The company also announced an increase in the higher end of the full-year forecast, taking the range from $5.20 to $5.50/kg MS.
Previously, farmers had expressed their disappointment in a low opening price, especially with all the other major processors opening at least 50¢ higher, including Fonterra at $5.30/kg MS
In a statement issued last Wednesday, Murray Goulburn said the June 6 opening price of $4.70/kg MS was issued earlier than previous years to assist suppliers with planning.
‘‘Since then, MG 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 2.5billion litres,’’ the statement said.
‘‘The updated FMP 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.
‘‘The decision to revise the opening price to $5.20/kg MS is intended to assist in maintaining competitiveness and support the supplier base.’’
The price revision was welcomed by the United Dairyfarmers of Victoria, who said it was a ‘‘sensible’’ decision after listening to suppliers.
‘‘They’ve taken a positive step forward, but many farmers across Victoria are still recovering from last season’s milk price cuts,’’ UDV president Adam 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.
It is also encouraging farmers to do their own numbers on their farms with their own systems.
Mr Jenkins acknowledged the early price announcement as evidence Murray Goulburn and other processors had listened to the farming community and broader dairy industry.
‘‘It’s good to see Murray Goulburn come out early with a revised price because it gives farmers time to plan their budgets for next year, when in the past these decisions would happen after the season has started,’’ he said.