FONTERRA has moved to assure suppliers it is committed to manufacturing plants in the south-west, after farmgate milk price cuts.
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Murray Goulburn and Lion Dairy and Drinks have also cut their prices.
More than 700 frustrated farmers called for an independent review of the entire industry at a Farmer Power meeting, with president Chris Gleeson saying if action wasn’t taken to combat the cuts there would be serious consequences.
“We’re looking at a loss of millions just in the south-west,” Mr Gleeson said.
Murray Goulburn and Fonterra account for about 80 per cent of suppliers in the south-west.
Fonterra Oceania managing director Judith Swales said Tuesday’s supplier meeting in Warrnambool covered the price announcement to farmers and the reasons behind it.
The meeting also detailed support packages to available to farmers.
“Fonterra has been upfront all season that the milk price did not reflect the market reality,” she said.
“We have continued to meet our pricing obligations under the BSC Milk Supply Agreement, even while our product mix and global price volatility have continued to challenge us and does not support the price paid. This has been compounded by our substantial losses due to our adverse product mix, comprised predominately of commodity powders, coupled with the unexpected rally in the Australian dollar.”
Ms Swales said the company signalled in August 2015 the possibility of a step-down and that farmers needed to budget conservatively.
“We recognise this does not make our milk price revision any easier on our farmers,” she said.
“At the same time, we recognise that the support package we have on offer does not favour autumn calvers, and we need to fix this. So, we are working around the clock to develop a solution to help support them. We expect to communicate this in the coming days.”
She said the company was working hard to get a clear line of sight for next season’s milk price so farmers could plan ahead.
“In the interim, we can confirm that for the next three years our milk price will not be discounted by Murray Goulburn’s support package of 20 to 27 cents per kg/MS. We will continue to pay a market milk price.”
Ms Swales said Fonterra was committed to taking a leadership position to ensure more transparency on milk prices for dairy farmers.
“We remain firmly committed to Australia, and to our manufacturing plants in the south-west, including our nutritionals plant at Dennington, our Cobden butter plant, and our state-of-the-art beverages plant,” she said.
“We know the events of the last few weeks are incredibly tough on dairy farmers.”