News

Burra Foods to pay for more fat

By Dairy News

BURRA SUPPLIERS have the opportunity to be paid on a 1:1 fat to protein ratio, reflecting the strong market returns for fat.

Burra suppliers had the option before the start of the season of selecting either a 1:2 fat to protein ratio or the 1:1 fat to protein ratio.

Burra’s opening price for the current season was $5.60 — $5.90 kg of milk solids. This includes the ‘commitment bonus’ offered in July 2017.

CEO Grant Crothers said Burra was not looking to grow significant volumes of milk this season but believes the new 1:1 payment ratio will attract interest from higher fat producing herds, which they would be “happy to sign up”.

“We have invested heavily in capacity and capability to meet our increasing demand and believe that higher fat producing herds will support our continued growth,” he said.

“We have seen consistent strength in the demand for fat products across our product range and want to both reward and incentivise our supply partners accordingly.

“Altering components on farm is not a quick or simple exercise and we recognise that many supply partners have geared themselves towards protein production which is why we are providing the option of either payment system,” Mr Crothers said.

“Offering both payment ratios provides our Milk Supply Partners the opportunity to increase the value of their milk, regardless of breed or feed.”

Jersey Australia published a report in March earlier this year calling for a simpler pricing system in Australia, where farmers are paid for milk solids, rather than individual ratios for fat and protein.

It welcomed Burra’s decision and called for all processors to provide payment options that reflect the strong market demands for fat.

“Jersey breeders in South Gippsland will welcome the move to provide them a fairer return for their higher fat content milk supplied to Burra Foods,” Jersey Australia President Chris MacKenzie said.

“Global shortages of butter and milk fat products for processing have led to increased emphasis on fat in farmer payments, however payments for protein still outweigh those paid for fat.

“Burra Foods should be congratulated for being the first processor to move to bring the fat payment in line with protein and we call on all processors to provide payment equality for fat and protein milk components.”

Northern Victorian Saputo supplier Stephen Brown, who milks Jerseys on his Gunbower farm, said he was keen to see other processors to follow the lead of Burra Foods.

“I want Burra Foods to move here. The 1:1 (fat-protein) ratio would make a huge difference for us,” he said.

“Butter fat is what they want but they pay less for it.

“If Saputo or Fonterra went to 1:1 they’d have every high solids supplier in northern Victoria.”