The first opening milk price for the 2016/17 season has been announced by Warrnambool Cheese and Butter.
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Suppliers will receive 80 cents less than this season at $4.80 per kilogram of milk solid – a 14 per cent decrease.
Curdivale supplier Nick Reynard said while the price was lower than the cost of production, it had not come as a surprise.
“It’s going to be tough trading for farmers this year,” he said.
A farmer of 19 years, Mr Reynard said he was accustomed to seeing opening prices increase.
“It’s not going to be easy but hopefully we’ll see step-ups through the season,” he said.
Warrnambool Cheese and Butter made the next-season announcement ahead of industry competitors, sending an SMS and follow-up letter to suppliers last Friday, June 10.
In the letter, Warrnambool Cheese and Butter general manager Richard Wallace said the new price gave room to move as and when trading conditions became more certain.
“We take a cautious approach in this process to ensure that our opening price reflects the most current market outlook,” he said.
Mr Wallace said the recovery of the global dairy market would not be expected before the 2017 calendar year.
Farmer Power president Chris Gleeson said at the end of the day, suppliers now had a budget to farm on.
“An opening price is exactly that,” he said. “It’s an opening price and it’s as good a start as expected.”
Mr Gleeson said farmers now had the opportunity to analyse their businesses moving forward.
“It’s below cost and a lot of farmers will be questioning whether they are viable to keep farming,” he said.
