BURRA FOODS has announced a step-up in its base farm gate milk price, equivalent to $0.13/kg of milk solids across the 2019 financial year.
In a letter to suppliers in October, Burra Foods chief executive officer Grant Crothers said this step-up was the result of a softening Australian dollar against the US dollar, rather than market improvement.
“Global markets have remained relatively flat so far this season and in the case of the GDT (global dairy trade), every auction bar one has declined since the start of June,” Mr Crothers said.
“Thankfully, the Aussie dollar has depreciated by around six per cent since the start of July, which has enabled us to pass on as much benefit as we can to milk supply partners via this step-up.”
Mr Crothers said conditions were challenging this year for many farmers, including dairy farmers in Gippsland.
“We acknowledge the tough business decisions our milk supply partners are regularly making caused by dry seasonal conditions.”
He said each sub-region was impacted differently, and Burra Foods would continue to regularly review farm gate milk prices considering all market conditions.
“We have heard the messages from our milk supply partners about rising input costs and the decreasing availability of feed, which is driving higher prices, so we anticipate this step-up being welcomed.
“It’s never too early for a step-up but it is unusual to see them announced before December 1.
“We don’t see the market changing in the short to medium term but are continuing to barrack the Aussie dollar down.
“Our persistence to maximise value from product mix is never ending and we continue to develop markets delivering superior returns.”