Australian dairy company Bega Cheese has released its opening farm gate milk prices for the 2016/17 financial year.
The company has cut the farm gate milk price for the upcoming season from $5.60 to $5.00 per Kg of milk solids, which represents a cut of approximately 11%.
Executive Chairman Barry Irvin said dairy prices have been impacted by Russian sanctions of dairy imports, a slowing demand in China and highly competitive markets across the world.
“Farm gate milk prices are ultimately driven by returns we receive from markets both within Australia and globally. Many of the factors affecting these markets such as global supply, demand, currency relativities and competitor behaviour are beyond the control of individual companies,” Mr Irvin explained.
“Bega Cheese’s long term strategy of building value added business platforms does assist in enhancing the base value of dairy products and therefore farm gate milk price but cannot insulate farm gate milk prices from the reality of the market. These are difficult times in terms of farm gate milk prices, we believe our opening 2016/17 prices appropriately reflect the market and are responsible.”
According to Mr Irvin, analysts are not expecting an improvement in dairy community returns until at least the first half of calendar year 2017.