Let the Aussie milk circus begin
Independent Contributor
Yes it’s May already and with June 1 just around the corner, some well beaten processors are estimating their first guess at a milk price realistic enough to keep their current supply……and stay afloat…..But is our milk price actually high?
Saputo has burst out of the gate with a lukewarm $7.80 – 8.00/kgMS compared to this seasons $9.30 – $10+ depending on your market pull…..ie small farmer supplier as opposed to corporate supplier. The shrinking milk pool has finally flattened thanks in part to the volatility our sheep and beef cousins are experiencing, will this mean the end of processor competition?
The three big boys have had a rough year, Saputo and Bega announcing net losses in excess of $100 million and Fonterra managing a small profit much to the delight of their kiwi owners being paid a milk price around 20% lower than their Australian counterparts, such are the perils of exporting 90% of your milk in an auction system led by the notoriously unreliable Chinese demand.
Now to throw the cat amongst the pigeons, Fonterra announces just prior to ‘milk price month’ its intention to sell off its Australian business and consumer brands (a 180 degree U turn on its previous ‘value add’ policy)…..is there a logical reason to put some of their Australian supply at risk prior to selling? Or is it just another ‘odd’ decision from a long list of failing co-operatives?
Of NZ’s two biggest meat processing farmer owned co-operatives, Alliance group is almost broke after posting a $100 million loss, while its competition Silver Fern Farms recently jumped ship and sold 51% to the Chinese before it hit the bottom of the cliff. Combine these stories with Australia’s own farmer owned milk processing disaster that was Murray Goulburn, perhaps, hybrid co-operatives like Silver Fern Farms are a solution?
If this is struggling to make as much sense as a Middle East ‘conflict’ or a Russian Western border ‘military operation’, let’s look across the ditch to bring some logic into play…..the NZ milk spot price is NZ$9.25/kgMS or 10% above Saputo’s opening guess.
This middled-aged bemused Fonterra shareholder, turned Victorian/Canadian dairy farm overseer and now Director of Agribusiness can confirm, the world has gone mad, but a May milk price fight is a wonderful piece of Australian farming entertainment to look forward too.