Farmers question Fonterra’s price motive

By Rodney Woods on August 08, 2017
  • Farmers question Fonterra’s price motive

    Despite dairy farmers welcoming Fonterra Australia’s most recent milk price step-up, some are concerned the company is being deceptive when it comes to the reasons for increasing the price.

Despite dairy farmers welcoming Fonterra Australia’s most recent milk price step-up, some are concerned the company is being deceptive when it comes to the reasons for increasing the price.

These concerns have come about due to a lack of trust in the company, and Katunga Fonterra supplier Peter McIntosh questioned the processor’s motives in its latest step up of 20¢ to an average full-year milk price of $5.50/kg of milk solids.

‘‘It’s got to be competitive advantage they’re looking for,’’ Mr McIntosh said.

‘‘No questions Fonterra would prefer to be the leading processor in Australia.

‘‘We are supposed to be naive enough to accept that this is simply a market driven variation in price?’’

Mr McIntosh questioned whether it was in the industry’s best long-term interests to see Fonterra ‘‘take advantage of the situation with Murray Goulburn’’ and press for commercial dominance.

Muckatah supplier Peter Letcher agreed, saying there was no doubt Fonterra was looking to gain an advantage over the competition.

‘‘(By announcing this), they are definitely putting the boot into Murray Goulburn and to maintain milk supply,’’ Mr Letcher said.

‘‘It’s definitely a PR thing as the end-of-season payout expectations haven’t changed. They need to get good PR out there, with what they’ve done to suppliers.’’

Despite all the concerns, Mr McIntosh said he was ‘‘quite happy to accept the price they’re offering’’, arguing if it benefited suppliers in the short-term, it wasn’t a bad thing.

Stanhope Fonterra supplier Arthur Marshall said he was expecting the new price.

‘‘They’ve come up to $5.50 to compete with Tatura Milk or Bega. We budgeted on $5.50 anyway so we were expecting it,’’ Mr Marshall said.

UDV president Adam Jenkins welcomed the price step-up as positive in ‘‘returning cash back into farmers’ pockets’’.

But Mr Jenkins said the step-up was market-driven, and stressed the importance of the farm gate milk price reflecting market prices.

‘‘We don’t want to get too much divergence from that.’’

Bonlac Supply Company chair Tony Marwood said this early season step-up was important in restoring farmers’ confidence.

He said because of Murray Goulburn’s low prices, Bonlac no longer saw the current benchmark agreement against the largest Victorian processor as appropriate in today’s Australian dairy market.

By Rodney Woods on August 08, 2017
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