Murray Goulburn cuts dairy prices
Australia’s largest dairy co-operative Murray Goulburn has slashed the price it will pay farmers for the next season to the lowest possible level, at $4.31 for milk solids.
This is well below the $5 set by Bega Cheese last week and the $4.80 from Saputo-controlled Warnambool Cheese and Butter.
In its statement to the market, Murray Goulburn forecast the price would be $4.80 by the end of the season.
This is dire news for farmers who say the cost of producing milk is round $5 to $5.50 a kilogram.
In the company’s statement to the market, the company’s interim chief executive officer David Mallinson acknowledged the difficult times ahead for suppliers.
“Commodity prices remain the largest external influence on MG’s financial performance,” Mr Mallinson said.
“Global conditions have not improved, and the latest data suggests excess global inventories, including the impact of European intervention, may have surpassed the equivalent of 6 billion litres of milk.”
He said the company did not expect any significant recovery this year and only a modest improvement with prices tipped to rise 6 per cent in the second half of next year.
“This prolonged environment of lower prices means MG expects to achieve lower average selling prices for commodities throughout FY17 when compared with FY16, which will impact the distributable milk pool by about $95 million,’’ he said.
“We have set a robust forecast, and while there are a number of areas which may provide upside to our FY17 forecast, we do not believe it is prudent to include these in our forecast at this stage.”
by Leon Gettler, June 29th 2016
