DAIRY farmers throughout the district are bracing for further industry anxiety following Murray Goulburn’s announcement last week to cut its forecast seasonal farmgate milk price.
The dairy co-operative expects supply levels will be 20 per cent lower during the current financial year compared with the 2015/16 period, resulting in the reduction of returns to $4.70 per kilogram of milk solids – an 18-cent drop.
Recent rainfall also impacted on the industry, with floods impacting on farmers’ ability to provide milk to the co-operative.
“Until recently, there was confidence that Spring rainfall was positioning the industry for an excellent season. However unexpected continual rainfall since mid-September following the step-up announcement on September 13 has created a major challenge for our suppliers and industry,” Murray Goulburn interim chief executive officer, David Mallinson said.
“Production across south-eastern Australia was down 10.7 per cent in August, and this trend has continued to date.
“In particular, the north of Victoria has moved from drought-like conditions in the 2015/16 financial year to severe wet conditions, with production from that region down 16.9 per cent August year to date.”
As a result of the reduction in the predicted final farmate return, the co-operative will suspend its Milk Supply Support Package up to the end of the financial year, meaning suppliers will not need to pay 14 cents per kilogram back to the co-operative following retrospective price cuts announced earlier this year.
Mead dairy farmer, Di Bowles said the announcements will create more anxiety for suppliers still coming to terms with the cut to returns earlier this year.
“I am very pleased to see the Milk Supply Support Package suspended, but I am disappointed the end of season prediction has been pulled back,” she said.
“I am also pleased that Murray Goulburn has acknowledged the amount of milk it has lost due to the announcements made earlier this year.
“The loss of production is due to the season, which is something Murray Goulburn could not control.”
The co-operative will continue to review its Milk Supply Support Package, with the outcome to be announced at its annual general meeting on Friday.
Murray Goulburn has also introduced other initiatives to ease financial pressure, such as an advance pre-payment option and a growth incentive payment.
“The FMP pre-payment may help farmers with pre-payment but we have to question whether these decisions are in the interests of suppliers,” United Dairyfarmers of Victoria president, Adam Jenkins said.
“We will be looking for the detail on this at the AGM next week. All suppliers, including new and contracted suppliers and those who have pre-paid their MSSP must be treated equitably.
“UDV is willing to work with industry and having competitive processors is paramount to the success of the Australian dairy industry.”
