Milk processors are becoming more competitive as the season opening looms, with Bega the latest company to lift its starting price just a week before the new financial year.
Saputo has opened at $6.80/kg of milk solids and the company says it won’t review its prices more than once in three months.
Fonterra, at the time of going to print, was on $6.60/kg MS.
Bega Cheese has lifted its opening price for next season to $6.75/kg, which means that some northern Victorian suppliers could earn more than $7/kg with incentives.
Bega had announced an opening of $6.60/kg at the end of May, but competition for milk supply has pushed the company to go to $6.75/kg, just a month later.
Milk supply has been declining in recent months due to the cost pressures of irrigation water and grain for feed.
Tatura Milk supplier Rob Schloss said the recent 15¢ increase to the opening price, plus the 20¢ cent payment for supplying milk in the north, brought his opening price to $6.95.
‘‘This gives us a lot of confidence for next season and it’s only an opening price too, it might go higher yet,’’ Mr Schloss said.
He is planning on milking 300 cows this spring, but what happens after that will be totally dependent on seasonal conditions.
‘‘There are lots of factors that will come into play, especially around the water job, but a price like that does make sourcing feed at the right price more attractive.
‘‘We need a price like this to encourage people to hang in there; the milk price is one thing, but it is the water job that has everyone worrying.’’
Parmalat supplier Terry Malone from Bamawm is happy with his opening price of $7.05.
He is hoping with a bit of extra supermarket money from Coles and Woolworths, that price could creep a little higher.
‘‘It all depends on irrigation water and whether or not it rains,’’ Mr Malone said.
‘‘Water will be the key to a good year and hopefully there will be cheaper hay and a drop in grain price to make it even better.’’
He will milk about 270 split-calving cows this season.
April and Steve Kunde from Mincha, north of Pyramid Hill, are supplying Saputo.
Ms Kunde said they couldn’t grumble about their $6.80 opening price.
‘‘It’s a better price than we have ever had before so we can’t complain, although of course we would always like more, but everyone has to make a dollar and we all need to survive,’’ she said.
Bega Cheese is paying a 20¢ irrigation rebate to northern Victorian suppliers, and all suppliers who choose to lock-in for three years can earn a loyalty payment of up to 17¢.
Bega executive general manager of ingredients Mark McDonald said Bega’s initial opening price was purely based on market conditions, but the new price was due to the competition in the market.
Mr McDonald said they were getting good feedback on their new, simpler 9/3 price system that provides farmers with stronger first-half cashflow signals.
He said Bega would keep its pricing under review.
Asked about the effect of the high input costs on supply from northern Victorian farmers, Mr McDonald said their suppliers were being affected by the seasonal conditions.
He said the company was working with its suppliers, nationally, to hold volume.