By Brad Lester
MILK prices continue to rise, giving the local dairy industry a much needed boost to optimism.
Murray Goulburn last week announced its fourth step-up of the current year, lifting prices by 25 cents a kilogram for protein and 10 cents a kg for butterfat.
Bega Cheese announced a loyalty payment of eight cents a kilogram butterfat and 20 cents protein.
Burra Foods is expected to announce a considerable step-up this week and Fonterra prices are likely to remain steady.
MG’s rise is higher than the last step-up of 20 cents for protein and eight cents for butterfat, announced late in November.
Farmers were expected to lose hundreds of thousands of dollars after opening dairy prices fell by an average of 12 per cent – the first reduction in opening prices since 1973.
That was a result of world milk powder prices falling 60 per cent and cheese and butter prices plummeting 50 per cent as a result of the unprecedented collapse in world financial markets.
Inverloch dairy farmer and MG supplier, John Murray, is looking forward to putting the extra funds towards catching up on maintenance, installing pipes and undertaking fencing.
“It will certainly help make a difference because we’ve had to cut back on a lot of things and now it means that we will be able to get ahead and do them,” he said.
“Anything is better than nothing. The way things are going, we will probably get another one or two rises.
“It’s been pretty tight all the way through. We have to keep up the fertiliser because if you don’t, you don’t have any feed but now we won’t have to worry about that.”
MG supplier Ray Argento of Toora said farmers had accumulated debt to cope and would now focus on paying that off.
“By no means is the step-up going to enable us to go out and spend at this stage,” he said.
“A lot of farmers had major purchases locked in because they thought it was going to be a good season and so now they’ve had to lock down.
“Farmers have got some way to go before they are at the level they were at previously. It will take several months to pay off the debt they have accumulated in the last couple of months.”
The Argentos have coped on minimal income by ruling out capital purchases and covering existing debt.
“We will just maintain the farm to the level where we are just running the farm on a maintenance budget,” Mr Argento said.
“The drop in grain prices assisted us to cushion the blow but in saying that, all our other costs have remained high.”
MG managing director Stephen O’Rourke said continued market returns had enabled higher prices to be passed on to farmers.
“We will continue to consider investments that will improve the farmgate milk price for the co-operative’s supplier-shareholders. This is important as we aim to improve farm profitability and reduce volatility,” he said.
“The co-operative remains in good health post the global financial crisis and is well placed to consider projects that provide immediate as well as longer-term benefits to suppliers, including processing efficiency gains and increasing sales of value-added products.”
Bega Cheese chairman Barry Irvin said the positive outlook for dairy and the improvement in overall global economic conditions permitted the payment to be made. Fonterra spokesperson James Molan said there was “nothing to report at this stage”.
“We are running our own race and will pass on the market returns to our suppliers as quickly and equitably as we can responsibly do so,” he said.
According to GippsDairy, the regional development program for Gippsland’s dairy industry, milk price reductions have forced 63 per cent of dairy farmers to change their long term plans and 39 per cent to reduce supplementary feeding levels.
