Bega Cheese has cut its opening milk price for the next financial year.
Subscribe now for unlimited access.
$0/
(min cost $0)
or signup to continue reading
The dairy giant’s executive chairman Barry Irvin said the opening farm gate price for the 2016-17 season has been cut by 11 per cent across the supply region.
For milk solids, this translates into $6.08 per kilo in the Bega Valley and $5/kg in Victoria.
This is a drop from what was $6.83/kg for the 2015-16 year in Bega.
Mr Irvin said the cuts are due to a significant global shift in supply and demand.
There has been a significant increase in supply, particularly in Europe, with a “slow down” in China which combined with the highly competitive Australian market resulted in the decision.
Mr Irvin admitted there was “no doubt” it would be a challenging year for dairy farmers in the Bega Valley.
“They are obviously significant cuts and they will mean it will be a fairly challenging year for our suppliers,” he said.
“But it will vary between suppliers.
“The positive [for the Bega Valley] at the moment is that we have had a lot of rain so we can hopefully look forward to a good season.”
Mr Irvin said as many people thought the cuts could be as high as 15 per cent he was glad the company was able to keep it lower.
Only one other company has released its new dairy price - Warrnambool Cheese and Butter – and Mr Irvin said Bega Cheese’s price is higher.
Farmers disappointed
Following the announcement of a drop in farm gate prices from Bega Cheese, Cobargo dairy farmer Tony Allen, who is one of the Bega Cheese suppliers, said it would hurt every farm business.
The cut follows the widely reported announcement in April that Murray Goulburn had cut its farmgate milk price for the rest of 2015/16 from $5.60 per kilogram of milk solids to between $4.75 and $5; effectively a retrospective cut in prices.
“It’s a 10 per cent reduction in income. It can make it difficult to maintain a viable business especially when costs are increasing all the time. The costs are just there, the electricity costs, they don’t go down,” Mr Allen said.
He said that it would be particularly tough on the younger farmers who were investing in their businesses.
“It’s very disheartening in a commodity like milk and cheese and all those bloody marvellous products that come off farms,” Mr Allen said.
Mr Allen said the price cut from Bega Cheese will mean farmers receive about 41 cents for a litre of milk before costs.
Bega Cheese and Murray Goulburn claim that dairy prices have been hit by significant growth in supply.
RELATED COVERAGE