Dairy farmers are gearing up to swap processors this weekend as they chase higher farm gate prices.
The change, to coincide with the monthly milk payment, will be the second wave of change, with some suppliers having shifted on July 1. Another wave of change is expected in mid-August.
While the extent of the transfer is not known, and is between several processors, many say it is the biggest in a decade and warn there is only limited capacity to move.
Murray Goulburn recently told competitors it would not process excess seasonal milk, a practice it has done historically.
“Last year and this year is the biggest churn we have ever seen in the industry,” United Dairy farmers of Victoria president Adam Jenkins said.
“But there really is only a certain amount of processing capacity in Victoria … a certain amount that can’t move.”
Bega Cheese executive chairman Barry Irvin said “commercially we haven’t revealed how much milk has moved, but we have certainly taken new milk in and we have taken what our capacity could handle”.
“In the last decade it is the most significant movement we have experienced,” he said.
Mr Irvin said moves were on price and reputation.
“In some cases these are people who have moved only once in a generation or even beyond that. They are obviously thinking about price and they think about who it is they might like to supply,” he said.
Saputo chief executive Lino Saputo Jr said Warrnambool Cheese and Butter had gained 250 million litres in the past year.
Fonterra Australia general manager of milk supply Matt Watt said by the end of this season it would be close to its two billion litre capacity.
“We’ve received many inquiries from prospective suppliers across all regions, and we’re currently working through our waiting list to ensure the milk meets our requirements,” he said.
“We anticipate a significant volume to commence this weekend.”
A Murray Goulburn spokesman said it would provide an update on milk intake with its full-year results on August 22.
He said “there is a highly competitive environment for milk supply” compared with other years.
Woolsthorpe Murray Goulburn supplier Brian McLaren, who milks “a bit over 700 cows”, will stay with the co-operative following a price lift last month.
“I would have been gone at $4.70 a kilogram of milk solids or the clawback, but at $5.20/kg/MS I can break even or make a small profit,” he said.
Source: The Weekly times