Milk processor Parmalat has flagged a simplified milk pricing and loyalty incentives for the coming season.

Last month, it increased its Victorian farmgate milk price by 10 cents, to $6.20 kilogram/Milk Solids.

“In view of the ongoing drought conditions, Parmalat has elected to make this a step forward, to encourage ongoing autumn/winter production for our domestic market,” National Milk Supply manager Malcolm Fechney said.

Parmalat has written to northern dairy farmers pointing out it has been forwarding the Woolworths drought levy to regional suppliers since September last year.

The January payment was 3.3 cents per litre or about 42c kg/MS.

Mr Fechney said the increase reflected the company’s commitment to “be ahead of the key market benchmarks, based on our higher quality requirements.

“We will be announcing to our Victorian suppliers a new simplified pricing structure, which will align our market requirements with the milk profile we require,” Mr Fechney said.

He said Parmalat would continue to remunerate farmers who could supply premium quality milk, a flatter profile and January-July production.

The company would also recognise the tenure of a supplier’s relationship with Parmalat by paying an incentive, additional to the market benchmark.

“Parmalat is investigating the option of multi-year contracts and the pricing signals and commitments required to give suppliers confidence if they chose a longer-term contract,” Mr Fechney said.

“However, it appears the proposed code of conduct will have some direction for multi-year contracts, and we will need to wait and see what emerges from the code.”

Parmalat announced it’ll increase its butterfat payments by 18 cents a kilogram and protein by 36c/kg.

The move follows Fonterra’s seven cents kg/MS step up, bringing its average price to $6.05kg/MS.

Canadian dairy giant Saputo is also offering farmers $6.05kg/MS, lifting the price by 10 cents.

Australian Consolidated Milk is offering farmers a minimum $6.50 kilogram/milk solids for next season.

ACM announced the $6.50kg/MS is a floor price, which is broken up into nine months of $7kg/MS and $5.50kg/MS for the three spring months.

Original article sourced from https://www.stockandland.com.au

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