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Commenting on the move, Dairy Farmers Chief Executive Officer, Rob Gordon, said plans to increase the processor’s overall milk supply were to have been gradually implemented as the business continued to grow through its ongoing Step Change Program. In response to increasing industry competition in South Australia and Victoria these plans have now been brought forward.
“We recently reached agreement with the Dairy Farmers Milk Co-operative, through which our members supply approximately one billion litres of raw milk every year, to put into place a price offering with the potential to attract additional milk in Northern Victoria and the Riverina.
“To secure additional supply we have put on the table a very attractive, competitive milk price designed to encourage higher production among our existing farmer owners in the region as well as attract new suppliers.
“The pricing package includes minimum price commitments for a period of three years for those willing to enter into defined volume contracts, the terms of which include a safety net base price of 28 cents per reference litre for three years before any incentives.
“For those suppliers looking to enter into our standard supply agreements, for 2005/06 the typical farmer in the Southern region will receive 33.0 cents per litre. This includes quality payments of up to 1.5 cents per litre, compositional adjustments and rewards for those suppliers who sign longer term arrangements. New Milk payments ranging between 2 and 5 cents per litre also apply.
“For existing suppliers in the region, this represents a further increase on the base price revealed over the past month as part of our pricing structure.
“The key benefit for farmers willing to switch supply to Dairy Farmers is that not only will they receive an extremely competitive milk price and incentive package but they will also be able to better plan their 12 month cash flows thanks to our up-front payment system.
‘’Unlike most other processors in the region we will not be operating a system of step-ups which are basically indications of possible increases in milk price that may or may not occur during a season depending on how market conditions evolve. The issue for many farmers is that they cannot predict when or if these step-ups will become a reality.
Dairy Farmers’ Farm Services Officers are working with suppliers to evaluate the benefits of the package including the new offer for suppliers in Northern Victoria and the Riverina. For those suppliers willing to move quickly, there is the added reward that all contracts signed and received at the Dairy Farmers Sydney head office by 5 August 2005 will have their incentives package backdated to 1 July 2005.
For more information, interested farmers should contact Dairy Farmers Field Services Officer Greg Gilbert on (08) 8292 7707.
