Murray Goulburn has sheltered farmers from the real global milk price and they’re going to pay for five years, according to a leading consultant.
Gippsland-based consultant John Mulvany said the effect of the overpayment for milk in 2015-16 will result in the deduction of the equivalent of 24 cents a kilogram of milk solids from milk supply during the next three years, or $36,000 a year for a 150,000kg/MS farm, to pay back for this season’s mistake.
“The late notification is absolutely inexcusable,” he said.
John Mulvany
“It is not fair to the MG field staff who, until mid-December, were issuing income estimates with three step-ups leading to a milk price over $6 a kilogram of milk solids.
“The industry has been in a distortion and now they have exacerbated that distortion over time span of three years.
“That’s got to have an impact in confidence of the industry for the next five years.”
Mr Mulvany said the May-June price for milk would be 89c/kg down on what farmers had expected before today’s announcement. He said the current global milk price converted back to a farmgate milk price was about $3.60kg/MS. MG have the capacity to pay $4.75-$5kg/MS for the rest of the season, but it intends to pay $5.47kg/MS.
This $5.47kg/MS will be funded and has to be paid back gradually over three years by suppliers.
Mr Mulvany said MG cut its price up 13 cents a kilogram of milk solids for the remainder of the season and this recovers $30 million of a distributable milk pool which, is $170-$200 million down on expectations.
He said that on a 150,000kg/MS-farm recovering 13c kg/MS $19,500 of about $127,500 of overpayments for milk would be recouped this season.
The rest would come out of the milk cheque across the next three years at about $36,000 a year.
Source: Weekly Times Now
