Home' The Great Southern Star : July 5th 2016 Contents “THE STAR” Tuesday, July 5, 2016 - PAGE 3
By Sarah Vella
SOUTH Gippsland Mur-
ray Goulburn suppliers
have been left gutted by
the company’s low open-
ing price, announced last
Tuesday, June 28.
The cooperative has set an
opening milk price of $4.31 per
kilogram of milk solids for sup-
pliers making support package re-
payments and a predicted closing
price of $4.80 kg/MS.
However for many South
Gippsland farmers, the reality is
most will receive much less, more
like $4 to $4.10kg/MS.
“Dairy processors send letters
to all their suppliers to let them
know their opening milk prices,
but these are far too complicated
for anyone to decipher,” United
Dairyfarmers of Victoria president
Adam Jenkins said.
“We’ve been calling for trans-
parency around the weighted aver-
age milk price system for the last
three years, because a significant
portion of the industry receives
substantially less than the weight-
ed average price.
“The reality for some farmers
is they’ll be getting an on-farm
opening price as low as $3.90.”
Mardan Murray Goulburn
supplier Lucas Licciardello said
his opening price was well below
the “weighted average” price of
“Our farm’s opening price
is $3.98kg/MS. We have tried to
scrape the bottom of the barrel
and only got down to $4.60 (break
even milk price) so I need to find
another 62 cents,” he said.
“With a good season we
would only make a small loss, but
now I don’t know.”
Matt Harms from OnFarm
Consulting said the price an-
nounced by MG has left many
farmers shocked and disappoint-
“I don’t know of any budgets
that will break even at that open-
ing price. The likelihood is there
will be a few, but farms with any
degree of debt servicing won’t,”
“The key messages are to
speak to your creditors, your bank,
your milk company, farm advisors
and close network. Cash flow for
the next six months will be pretty
Mr Licciardello said if he
could find a different place to send
his milk, he would definitely take
“I am not going to sacrifice
my family’s livelihood so I can
hold the banner up for a coopera-
tive that has lost its way,” he said.
“Something has gone really
wrong and we are not being told
the truth yet. The more numbers
they give to us, we will work it out
Mr Licciardello said any step-
ups throughout the year were like-
ly to be swallowed up by MG’s
milk supply support package.
“If MG does achieve $4.80kg/
MS closing price, I am still only
looking at $4.21kg/MS,” he said.
“We will make our way
through it, it will just be hard. It is
sad people are in this position.”
Going broke would be the
only thing that would force Mr
Licciardello out of the dairy in-
“We are not near that point at
the moment, but the pressure on us
right now is ridiculous,” he said.
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ENJOYING a lovely lunch and a
few laughs at an event held for farm-
ers at Korumburra on Sunday were,
from left, Charlie and Jy Carew from
Arawata, Ashley Hansch from Koru-
mburra, Courtney Martin from Koru-
mburra, Jessica Carew from Korum-
burra, Rachel Axford from Arawata,
and Amanda and David Martin from
► Full story on page 33.
Low milk price lets farmers down
Tight times: farm con-
sultant Matt Harms said
the lower than expected
opening milk price from
Murray Goulburn will
make the season difficult
for many farmers.
FONTERRA Australia an-
nounced an opening farm-
gate milk price of $4.75kg/
MS and forecasts a closing
price of $5kg/MS.
Fonterra chief operating officer of ve-
locity and innovation Judith Swales said it
was a responsible opening price.
“Our forecast is based on the Austra-
lian 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,” she said.
“While we are still seeing an imbal-
ance between global milk supply and de-
mand, there are signs in key milk produc-
ing areas of a slowdown in production and
increased imports. This supports our view
of a recovery in global prices as we move
through the season.”
UDV is calling on dairy processors to
ensure all farmers receive income estima-
tions and a follow up visit.
“We still have people who have not
been contacted since the price drop some
weeks ago,” United Dairyfarmers of Vic-
toria president Adam Jenkins said.
The UDV is encouraging farmers to
make the most of the Taking Stock and
Tactics for Tight Times programs, avail-
able through GippsDairy.
“The ACCC and legal teams have also
been consulted for advice on removing
unethical clawback options from supplier
contracts,” Mr Jenkins said.
Economy to hurt
FARM consultant John
Mulvany said a milk price
below $4.50kg/MS creates
extreme pain for all dairy
farmers except those with
no debt and low expenses.
Mr Mulvany said at $4.31kg/MS,
the average dairy farm would lose
around $140,000 for the year, com-
pared to the five year average.
“That would mean $140,000 less
going into the local economy, per av-
erage farm,” he said.
“Right at the moment Gippsland
will be one of the lowest, if not the
lowest paid region in Victoria for
milk. It is dominated by Burra Foods,
MG and Fonterra and none of them
have good opening prices.”
Mr Mulvany said it was interest-
ing other milk processors including
Warrnambool Butter and Cheese,
Bega Cheese and Burra Foods were
exposed to similar conditions as MG,
but MG’s opening price was the low-
“I think that is really worrying the
loyal MG suppliers,” he said.
“At the end of the day, the only
thing people can do is find out their
actual milk price and respond as best
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