In a move pitched at boosting dairy industry confidence, Bega Cheese will pay its suppliers a season opening price almost $1 a kilogram more than the farmgate payment offer announced by Murray Goulburn co-operative early this week.
Bega has confirmed its Victorian milk suppliers will be offered $5.50 a kilogram of milk solids (MS) in 2017-18 – well above troubled Murray Goulburn’s $4.70/kg.
The Bega price is a 10 per cent lift on its 2016 opening price.
The south eastern NSW and northern Victorian processor – and Australia’s biggest name in cheese – is hoping its healthy opening price will lure new suppliers to its ranks and lift its milk inventory volumes.
The company said the new farmgate price reflected an improving global market for its exports to dairy product buyers, but it was being “appropriately conservative” about market prospects.
“We felt it was important to deliver a positive price signal to our farmers after what has been a very tumultuous period for the industry,” said Bega’s executive chairman, Barry Irvin.
“The price reflects improvements in the market while being appropriately conservative given the volatility experienced in global supply and demand in recent years.”
Bega believed its opening price would give confidence to existing suppliers and help attract new suppliers.
More milk supply would also improve the throughput and returns the company could achieve from the dairy ingredients market
Mr Irvin said Bega was growing its dairy offering in the cheddar, mozzarella, processed and cream cheese and nutritional milk powder sectors.