ACM guarantees price

By Alana Christensen

Australian Consolidated Milk has announced a guaranteed price minimum of an average of $6.50/kg of milk solids for the 2019-20 season, including an off-season price of $7/kg MS.

The news was shared with suppliers last week, with the company shifting to a nine and three pricing system, introducing a minimum guaranteed price of $6/kg MS for September to November and $7/kg MS for the remaining nine months.

ACM has currently forecast an opening price of $6.70/kg MS for the 2019-20 season.

ACM commercial general manager Peter Jones said the company was conscious of ‘‘leading the market’’ and announcing its pricing early, to ensure suppliers could make decisions early.

‘‘We really wanted to acknowledge how tough it is out there at the moment,’’ Mr Jones said.

‘‘We can’t control when it rains, we can’t control water price, we can’t control grain price, we can’t control international markets, but we can control our price.

‘‘We could have sat back and waited for our competitors to announce, but we thought let’s get on the front foot and our suppliers can decide.’’

Mr Jones said the decision to implement the nine and three model meant ACM would offer a lower price during the peak season when the milk supply had ‘‘more exposure’’ and the market was more volatile.

‘‘We have mechanisms in place to protect that price ... We believe we can achieve a strong price,’’ he said.

The milk price announcement also includes a 6¢/kg MS irrigation water support package for the 2018-19 financial year.

Suppliers will receive a retrospective payment to be made by mid-March, with further support payments to be included in milk invoices until the end of the financial year.

Organic milk will also shift to the nine and three payment system, with suppliers who have signed a fixed price agreement last year receiving a 16¢/kg MS step-up added to their monthly price for the next two years.

The announcement follows a series of other processors, with Saputo, Fonterra and Bega all announcing step-ups this year.

Saputo announced a step-up of 14¢/kg MS for protein and 7¢/kg MS for butter fat, bringing its average farm gate milk price to $6.05/kg MS.

Fonterra also currently has an average farm gate milk price of $6.05/kg MS following a 7¢/kg MS step-up this month, while Bega announced a step-up of 14¢/kg MS.