Higher farmgate prices on offer as processors move to secure volumes

DAIRY factories have continued to stem a potential loss of milk supply by increasing farmgate prices.

It comes as farmers have started to move their supply chasing better returns, and as a milk supply group and southwest Victorian processor are locked in a spat about a price step-up and confidentiality.

The Weekly Times understands big milk volumes have moved between processors in northern Victoria and Gippsland, with Parmalat and Fonterra suffering the biggest losses.

Asked if Fonterra had lost more than 50 million litres from the north and the same from Gippsland, a company spokeswoman said, “we’ve seen movement at this time of the year, which is normal, and we’re comfortable with how our volumes for the season are shaping up”.

Parmalat, understood to have lost more than 30 million in the north and a lot in Gippsland, did not respond.

Much of the milk movement happened just days after Parmalat added 20c/kg of milk solids to its price, pushing it to $6.10/kg of MS.

Some farmers remained locked into supply contracts, unable to move processors, but milk is expected to continue to shift for up to six weeks.

Many who supplied Murray Goulburn, bought by Saputo, are waiting for 40c/kg of MS due in August.

Dairy Australia analyst Norman Repacholi said processors were outbidding themselves to keep milk.

“With government authorities and farmers scrutinising processors’ contracts and pricing and the propensity of farmers looking to change — or have changed — means processors are especially mindful of milk flows,” he said.

Australian Dairy Farmers Corporation last Friday wrote to suppliers saying it would chase a milk price step-up from Bulla Dairy Foods — the processor it supplied until Saturday.

The ADFC letter also said its solicitors had written to Bulla demanding Bulla comply with confidentially obligations.

ADFC claimed Bulla used ADFC milk production data to develop income estimates when it directly approached ADFC suppliers to recruit milk.

Bulla general manager dairy Rohan Davies refuted ADFC’s claim, saying it was “baseless and misleading” and set a false expectation for farmers.

“We feel this claim is an attempt to discredit Bulla, post the company’s decision to seek alternative milk supply for the 2018-19 season,” he said.

Article sourced from www.weeklytimesnow.com.au

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