Tasmanian dairy farmers have been dealt another bitter blow after price setter processor Murray Goulburn posted a weak opening farmgate milk price for the upcoming 2016-17 season.
Subscribe now for unlimited access.
$0/
(min cost $0)
or signup to continue reading
Two months ago farmgate milk prices plummeted from more than $5 per kilogram of milk solids to between $4.75kgMS and $5kgMS for the two major processors Murray Goulburn and Fonterra.
This cut was well below the cost of production for farmers. It meant for each litre of milk they produced, they were being paid 15c, a drop from 55c in previous seasons.
On Tuesday, Murray Goulburn, one of the two major processors Tasmanian dairy farmers supply to, announced its opening farmgate milk price for the 2016-17 season would be $4.80kgMS.
Murray Goulburn Co-operative Co. Limited (MG) announced that it is forecasting an farmgate milk price of of $4.80 per kgms with a net opening of $4.31 per kgms after application of the Milk Supply Support Package (MSSP) repayment.
Tasmanian Farmers and Graziers Association dairy council chairman Andrew Lester said the opening price was disappointing for farmers, particularly after the tough 18 months they have experienced. An unprecedented prolonged dry season, followed by flash flooding in January, a fodder shortage, the crash in farmgate milk prices in May and more recent flash flooding two weeks ago have all compounded to create a horror season, particularly for dairy farmers.
“It’s very disappointing, especially when you add up current events, the price is about 20c lower than we thought it would be,” Mr Lester said.
Mr Lester said the impact of recent extreme weather events, including drought, bushfires and flood, all experienced in the past 12 months, had driven up the cost of production for dairy farmers. Faced with the weak opening milk price, he said some farmers would really struggle to break even this season.
Murray Goulburn interim chief executive officer David Mallinson acknowledged the price would mean a “challenging year” for its suppliers.
“In the face of these difficult market conditions, the forecast financial year 2017 farmgate milk price reflects MG’s view that commodity prices will continue to trade around current levels for the remainder of the 2016 calendar year,” Mr Mallinson said.
“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 approximately $95 million.”
Mr Lester urged farmers to use existing support programs and to ensure they had all the information to make budgets for their farms in the face of the second price drop.
Fonterra has yet to set its opening season farmgate milk price but is expected to do so in the coming days.