The growth in milk supply remains flat, despite higher farm gate milk prices, according to Bega Cheese’s half-yearly financial report.
Bega chairman Barry Irvin said although prices were higher, milk production remained at an anticipated zero to two per cent growth.
The opening price for this financial year was $7.14/kg of milk solids, compared to the previous year’s opening of $6.40/kg MS.
In a presentation to the industry and analysts on February 24, the company reported a flat to slightly negative milk supply so far in this financial year, with farmers facing increased input costs.
The historically stronger milk price reflected market improvement and the strong competition for milk supply.
Asked about whether the higher prices would spur improved supply, Mr Irvin said one of the challenges facing the company was that farmers wanting to expand were still hard to find.
While there were good market signals for anyone wanting to lift production, some of the ageing dairy farmer population who were approaching retirement were looking at attractive land and cattle prices or switching from dairy to beef.
Bega Cheese reported half-yearly earnings of $97 million on a turnover of $1.5 billion. The company had borrowings of $378 million and net assets of $1.2 billion.
It also reported a successful integration of the $500 million Lion Dairy & Drinks business, which brought-in a number of major brands including Pura, Dare, Big M, Yoplait and Farmers Union.
The company gained 13 processing sites and three national cold store distribution centres in the Lion purchase.
Bega Cheese shares closed to a low of $4.90 on the day the financial results were released.