Fonterra Australia looks to rebuild relationship with suppliers

By Rodney Woods on May 16, 2017
  • Fonterra Australia looks to rebuild relationship with suppliers

    Fonterra Australia has announced its forecast full-year farm gate milk price range for the 2017-18 season as the company looks to rebuild its relationship with its suppliers.

Fonterra Australia has announced its forecast full-year farm gate milk price range for the 2017-18 season as the company looks to rebuild its relationship with its suppliers.

Twelve months on from the announcement that both Fonterra and Murray Goulburn would significantly reduce the milk price, Fonterra Australia has much better news for farmers, announcing a forecast full-year range price of $5.30 to $5.70/kg of milk solids.

‘‘Providing Fonterra’s forecast full-year price range now is aimed at giving our farmers guidance so that they can plan for next season with confidence,’’ Fonterra Australia managing director René Dedoncker said.

‘‘We’ve invested in world-class assets, improved our product mix, and exited non-strategic businesses.

‘‘This coupled with the rebalancing of global supply gives us the ability to pay a competitive milk price to our farmers.’’

Fonterra has also announced it will pay its Australian suppliers an additional 40¢/kg MS next season, bringing its forecast full-year milk price range to $5.70 to $6.10/kg MS.

Girgarre dairy farmer and Fonterra supplier Spencer Rendell expected the price to increase as the season went on.

‘‘I think this is a start-off price and I think there’s good things to come,’’ Mr Rendell said.

‘‘At least the price is going in a positive direction.

‘‘I thought we would get a price around $6.10 without the 40¢ extra. If we take the exchange rate we should be getting $5.80 now.’’

Nathalia farmer and Fonterra supplier Morris Cobbledick said the additional 40¢ could get him closer to a profit.

‘‘Any increase is good. If (the timing of) the 40¢ works out, it puts us back in a profitable position,’’ Mr Cobbledick said.

In addition to the 40¢ increase, Fonterra has also said it will reimburse the interest charge for the Fonterra Australia Support Loans package that was included in this season’s milk price to all current suppliers.

‘‘We said that we would consider Murray Goulburn’s recent announcements including the decision to forgive its Milk Supply Support Package,’’ Mr Dedoncker said.

‘‘We’ve consulted with the Bonlac Supply Company on the best way to respond to our suppliers.

‘‘We believe this payment is the right thing to do and we’re committed to ensuring our farmers are better off by partnering with us.’’

The additional payment of 40¢/kg MS will be available to all current, retired and recommencing suppliers.

Fonterra’s opening price for season 2017-18 will be announced closer to the beginning of the season.

UDV says trust needs rebuilding

The Victorian dairy farmers have acknowledged Fonterra’s effort to forecast a closing milk price for next season, noting it would assist in farm planning.

But while farmers lobbied extensively for milk processors to give early price indications, the UDV raised concerns about Fonterra’s move not to reimburse farmers who switched processors when it slashed the farm gate milk price from $5.60/kg MS down to $1.91/kg MS last season.

‘‘Fonterra has listened to industry and is taking steps to provide a more stable commercial environment for their farmers by providing an indicative forecasting for the season’s milk price,’’ UDV president Adam Jenkins said.

‘‘However, this was an opportunity to draw a line in the sand and start rebuilding trust in the industry after the milk crisis, but nothing has been done to rectify the heartache caused to many farmers who bore the burden of management decisions last year.’’

Mr Jenkins said Fonterra’s refusal to compensate farmers who switched processors for financial reasons would make the dairy industry more inequitable.

‘‘Farmers who were financially forced to leave their processors should not be forced to continue to bear the cost of processor actions and serious questions must be answered about the fairness and equity of the treatment of those who have left through no fault of their own,’’ he said.

The UDV has been working to implement a code of conduct for the dairy industry in a bid to avoid a milk crisis from occurring again.

By Rodney Woods on May 16, 2017

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