Fonterra Australia has lowered its forecast range for its farmgate milk price at the close of the current season, but also raised the current price its farmers will be paid.
A rise of 10 cents per kilogram of milk solids will take the company’s average farmgate milk price to $5.62 per kilogram of milk solids, and the change will apply from July 1, 2017, and be paid on December 15.
Managing director Rene Dedoncker said the change has been enabled by the company’s higher returns on the back of a better product mix.
Fonterra Australia operates seven manufacturing sites in Victoria and Tasmania, and collects milk from almost 1,100 farmers that goes into products under brands such as Mainland and Western Star.
With the additional 40 cents per kilogram of milk solids announced by Fonterra Australia in May, farmers will be paid an average of $6.02 per kilogram.
The company has also trimmed its forecast average milk price closing range to $5.62 to $5.70 per kilogram of milk solids, reflecting some softening in the global market, Mr Dedoncker said.
“We remain committed to providing our farmers with clear market-based signals, and the 10 cents per kilogram of milk solids reduction in the top end of our forecast range is a prudent way to reflect the impact of this global volatility,” Mr Dedoncker said.
He said the company has been growing its Australian business and will soon reveal expansion plans that will allow for an additional 500 million litres of processing capacity.
“We’re also exploring ways that we can work more closely with our suppliers, including whether there is a co-operative solution for our Australian suppliers,” Mr Dedoncker said.