The recent controversy surrounding Murray Goulburn and its price revision on southern milk pool suppliers does not directly affect the NSW milk pool, which includes some dairy farmers in Forbes, but shock waves are rippling through the dairy industry.

A spokeswoman for Murray Goulburn, Nicole Devlin, said that this month’s announced price reduction applied only to southern milk pool suppliers, which covers the Riverina, Victoria, South Australia and Tasmania.

The NSW milk pool is protected by a price contract between Murray Goulburn and Coles to supply all NSW milk for its NSW supermarkets.

Ms Devlin said Murray Goulburn was aiming to recoup losses over the next three years through the milk pool and through the Milk Supply Support package.

“The previous management forecast strong sales in adult milk supply in China, but it became clear once the early April sales figures were released that that forecast was not achievable, and this led to the price revision,” she said.

“We have tried to spread the burden over three years,” she said, although she added that producers have taken “a bit of a hit this season”.

A new pricing structure will be announced on July 1, but Ms Devlin was not able to comment on what these priceswill reflect as it was still in the negotiation stage.

Murray Goulburn is still in the public spotlight as it now faces media, and social media scrutiny, on debts from the application of the retrospective price revision, the

resignation of company leaders and calls for more to go, and the call for involvement of ASIC.

In a letter to its suppliers (and published on its website) earlier this month, the Murray Goulburn (MG) board and management acknowledged the impact of the announcements on its suppliers, particularly as many were already dealing with poor seasonal conditions.

The MG letter told suppliers that it was also dealing with record low global dairy ingredient prices, and low market prices, but there was no question about its financial stability.

MGs revision concluded that the contracted price of $5.60 per kilogram milk solids for the final quarter of this financial year was no longer achievable, and announced a farmgate milk price of between $4.75 to $5.00 per kgms for the balance of this financial year, for a financial year farmgate milk price of $5.47kgms, to recover approximately $30 million.

The support package will ensure suppliers receive payments this financial year equivalent to $5.47kgms, with the package and its cash funding cost to be recovered by suppliers’ milk payments for up to three years, according to the Murray Goulburn website.

Cautious welcome of Coles dairy move

NSW Farmers Association has cautiously welcomed this week’s announcement by Coles to create an independent fund to support Murray Goulburn dairy suppliers who have suffered through the company’s step down.

NSW Farmers has been engaging with Coles’ Executive team on this issue and looks forward to future consultation.

“We welcome any leadership at the retail level that supports our southern dairy farmers during this difficult time,” chair of NSW Farmers Dairy Committee Rob McIntosh said.

“While this fund may go some way towards addressing the current crisis of price cuts and claw backs threatening the livelihoods of farmers; it is important to note that this is only one part of a wider conversation regarding the sustainability of the industry. Farmers need long term investment in proprietary brands as uptake of these products will enable processors to reinvest margins into research and development for new and existing products which will drive stronger farm gate returns,” he said.

“Not all consumers want to pay more for proprietary brands, but those who do have the thanks of farmers.

“As has been pointed out in this debate, milk is currently cheaper than bottled water and no one would give that a pass mark.

“Any price improvement in fresh milk is welcome and I hope that other retailers consider their position.

“More broadly, I would hope this current focus on milk prices provides a fresh opportunity for the ACCC’s Agricultural Engagement Unit to take a new look at a long standing problem.

“Dairy farmers in Australia work hard to produce local and fresh milk. It is important that the price they receive reflects the time and effort they put into that production.”

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