After a series of milk price cuts, the tide could be turning with Murray Goulburn (MG) announcing a price increase for dairy farmers.
MG has announced a rise of 15c per kilogram of milk solids (kg/ms) for FY17 on the back of strengthening global trade, the first rise since a spate of retrospective milk price cuts from the dairy cooperative.
MG said the milk price rise didn't change its current 2017 net profit after tax guidance.
“Market conditions remain volatile however we have been able to capture enough of the current uplift to pass on both a step-up and modest increase in full year forecast to suppliers today,” MG’s Interim Chief Executive Officer David Mallinson said.
“Whilst international dairy markets have improved recently, they remain below historical average levels. Recent signs of recovery have come as global milk supply slows year-on-year. However, commodity prices and the strength of the Australian dollar remain a source of risk to current full year forecast.
“MG remains determined to deliver higher returns to its supplier shareholders through operational excellence and innovation. We have recently announced significant headcount reductions within the business and continue to review all other costs to support this objective.”
MG has lost around 7 to 8 per cent of its milk supply in recently months, and the partially listed company hopes the news will stem the exodus of farmer suppliers.
The new price, however, reportedly remains below the cost of production for farmers.
