Canadian dairy giant Saputo has announced an opening average milk price for its Warrnambool Cheese and Butter (WCB) and former Murray Goulburn (MG) suppliers of $5.75 a kilogram milk solids.
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MG’s farmer shareholders voted in April to sell the co-op’s seven factories and related assets and liabilities, including the powerful Devondale brand.
In a letter to suppliers, Saputo Dairy Australia (SDA) chief operating officer Kai Bockmann said the price would apply to southern milk region suppliers.
“This opening price represents our current assessment of expected market conditions for the coming year,” Mr Bockmann said.
“We believe it is responsible and allows room for upward movements if improved market conditions are realised throughout the year.”
Mr Bockmann said export market conditions had continued to improve, in recent months.
But the closing average price, for the coming season, would depend on many external factors, which might have an impact on returns.
“We will monitor market conditions as the season unfolds and update you as part of our quarterly milk price review process in October, January, April and June,” Mr Bockmann said.
The company said it would continue to operate with separate handbooks, for Saputo and WCB suppliers, with “no major changes to current terms and conditions”.
“We intend to fully combine our SDA and WCB supply groups from July 1, 2019, and provide an integrated range of pricing programs under one handbook,” Mr Bockmann said.
“In this transition year and to ensure that no supplier is disadvantaged, we will provide every supplier with the best available milk price at the end of the 2018/19 season.
“Simply put, this means suppliers will receive the highest price available to them based on both the WCB and SDA milk payment systems.
“This will ensure that all suppliers are paid the best available price at the end of the season regardless of their payment option during the year.”
Mr Bockmann said the reconciliation would take place at the end of the season, with a top-up payment made, if required.
“The milk price commitment made to former MG suppliers to pay at least the equivalent price to the largest two processors in the Southern Milk Region extends to all SDA suppliers,” he said.
