24 Jun 2016

FY17 Opening Milk Price

There has been plenty of comment as to the difficult year for almost anyone trying to make money through milking cows, and the actions taken by some of the larger processing companies has not made it any easier.

At Burra, we have and will continue to be straight forward with our Supply Partners. In doing so, we hope to assist in relieving the financial burden and uncertainty faced by many to ensure the future sustainability of this volatile and cyclical industry.

The last two years has seen processors announce full prices at the start of the year with no room for step ups. Our opening price range of $4.40 - $4.60 kg/MS for FY17 is a reflection of current market returns with some headspace for step ups should market conditions not deteriorate.

Recognising the need for Supply Partners to plan cash flow it was my intention to announce opening price last week. The delay has meant improved analysis and a sustainable and realistic price in a depressed market driven by over supply with a resilient AUD creating even more headwind. 

We know that markets move quickly and whilst we are optimistic for the year ahead let’s not sugar-coat the fact the market is particularly challenging and the industry has until recently been deluded as to the real value of farm-gate milk. The challenge for all of us is to continue to take costs out of the supply chain, particularly at the farm-gate  - a call to action so often repeated but necessary for survival in these times of reduced income driven by over supply and cyclical low markets. We have confidence in the market's ability to absorb the increased milk production and recover from the lower commodity prices seen during FY16.

As FY16 closes I'd like to thank all of the Burra community for their support and hard work in volatile and challenging circumstances. We are blessed to have a sustainable supply of high quality milk that can be produced at 'world's best' cost and a passionate team committed to adding the most value possible and responding promptly to market movements.