Bega Cheese has announced a reduction in its opening farm gate milk prices for the 2016/17 financial year.
The dairy company will pay approximately 11 per cent lower across all its supply regions. This equates to a Victoria farm gate milk price of AUD $5.00 per kilogram of milk solid.
In announcing the news through the Australian Securities Exchange (ASX), Bega Cheese reminded it maintained its 2015/16 farm gate price despite competitors Murray Goulburn and Fonterra dropping their prices.
“Farm gate milk prices are ultimately driven by returns we receive from markets both within Australia and globally,” Bega Executive Chairman, Barry Irvin said.
“Many of the factors affecting these markets such as global, supply, demand, currency relatives and competitor behaviour are beyond the control of individual companies. Bega Cheese’s long term strategy of building value added business platforms does assist in enhancing the base value of dairy of dairy products and therefore farm gate milk price, but cannot insulate farm gate milk prices from the reality of the markets.”
Bega reported analysts are not expecting an improvement in dairy commodity returns until at least the first half of the 2017 calendar year. The company listed significant growth in global milk supply, Russian sanctions on dairy imports, allowing demand in China and highly competitive markets as having a significant impact on farm gate milk prices globally.
“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,” Irvin said.
