Fonterra Australia has told suppliers that it predicts a closing farmgate milk price for the 2016/17 season of $5.00 per kilogram of milk solids (kg/MS), with an opening farmgate milk price of $4.75kg/MS.
The co-operatives’ Chief Operating Officer of Velocity and Innovation, Judith Swales, described this as a “responsible opening price” that reflects current market conditions.
“Our forecast is based on the Australian dollar holding at around 74 cents to the US dollar and reflects the revenue we expect to earn on products produced using our manufacturing assets. Our farmgate milk price in Australia is also impacted by global dairy markets given our mix of domestic and export sales,” Ms Swales said.
“While we are still seeing an imbalance between global milk supply and demand there are signs in key milk producing areas of a slowdown in production and increased imports into key markets such as China, Asia and Latin America. This supports our view of a recovery in global prices as we move through the season.”
She said the company was focused on building on its Ingredients strengths by making Australia Fonterra’s global hub for cheese, whey, and nutritionals, complementing our Consumer and Foodservice businesses.
Last year, Fonterra commissioned a multi-million beverages plant in Cobden, creating over 50 local jobs, with construction of the Stanhope cheese plant – on track for completion mid-2017 – well underway.
The company also signed new strategic agreements to fill Darnum, including Beingmate JV and Bellamy’s Organic, and is investing in market-leading brands, including Western Star, Perfect Italiano and Mainland.
“We are focussing on the future, and are continuing to build a strong Australian business that is here for the long term,” Ms Swales said, adding that individual suppliers’ milk prices will vary across Fonterra’s supply regions, depending on the individual farm’s milk profile, regional production factors, milk quality and farm management systems.