Saputo Dairy Australia has increased the milk price it is offering to its suppliers from $5.75/kg milk solids to $5.95/kg.
The payment is broken up into 14¢/kg of butterfat and 28¢/kg of protein.
Saputo chief operating officer Kai Bockmann said the increase reflected the positive impact of a weaker Australian dollar, despite a decline across all dairy commodities in recent months.
He said it was not connected to recent developments in the dairy levy proposed by Federal Agriculture Minister David Littleproud, although the company hoped the increased price would provide some assistance to those impacted by continued drought conditions and higher feed and water costs.
Gunbower supplier Stephen Brown said despite helping, the step-up was only a sideshow to the real problem.
‘‘It helps a little bit. But it is still a bit of a bandaid on a pretty big problem — that we are not making any money,’’ he said.
Mr Brown said he had more concerns about the structure of pricing rather than the price itself.
‘‘We are subsiding the industry with the sliding scale of the more you produce, the more you pay — it crucifies the small guys.
‘‘We are being penalised for producing milk as it is the cheapest to produce now and the third way is the fact that we are paid half as much for butter fat as we are for protein.
‘‘Why are they doing this? It should be a 50:50 split — it won’t cost processors any more.’’
Kyvalley Dairy Group has also increased the price it is offering to its suppliers in the wake of the dry conditions across the region.
The Kyabram company’s chief executive officer Alastair McCredden said the dry was making it tough for suppliers.
‘‘We have two big company-owned dairy farms and with the increasing grain and water prices and with fodder gone north, we’ve realised what it has cost us and we realised what our suppliers are going through,’’ Mr McCredden said.
‘‘It’s having a significant impact, with the temporary water being expensive.
‘‘Why we’ve acted now is so suppliers can plan for what feed and water they need over the summer period.’’
Kyvalley Dairy Group director Wayne Mulcahy echoed Mr McCredden’s comments.
‘‘We recognise that our hard working and loyal milk suppliers are doing it tough at the moment,’’ Mr Mulcahy said.
‘‘We felt that we needed to act and provide certainty to our supply base so that they can plan their way through to the end of the season.’’