Thursday, 22 June 2017 09:47

Murray Goulburn lifts opening milk price to $5.20/kg

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Murray Goulburn has raised its opening price by 50c/kg milk solids to $5.20/kg barely two weeks after its initial offering of $4.70/kg.

The co-op has changed its end of season forecast price from a range of $5.20-$5.40c/kg to $5.20-$5.50c/kg.

In a letter to suppliers, MG CEO Ari Mervis said the price was changed as MG “have had the opportunity to review the 2017/18 budget assumptions, which include dairy commodity prices, exchange rates and achieving cost out initiatives, as well as achieving milk intake of approximately 2.5 billion litres”.

“The updated FMP has also taken into account improved commodity prices reflecting anticipated market returns, together with additional sales that have been contracted.”

He also said: “We recognise that in the current competitive environment we need to maintain our milk supply and provide improved cash flow for suppliers.

“Our decision to revise our opening price to $5.20/kg MS is intended to assist in maintaining our competitiveness and support our supplier base.”

Supplier anger at the opening price of $4.70/kg was compounded when MG competitors subsequently opened at $5.50/kg or higher.

MG has lost significant milk supply in the past 12 months – with estimates as high as 20% - and an opening price well below the cost of production of its suppliers was seen as the final straw by others.

MG’s rivals have been aggressive in their pursuit of their suppliers since the opening price was announced.

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