Lion Dairy & Drinks has announced an opening variable milk price of $5 a kilogram milk solids for its direct milk suppliers in Victoria, Tasmania and South Australia.
Since 2013, Lion has offered its suppliers the option to lock in all or part of their price on 50 per cent of the milk produced.
It said as the majority of its suppliers had opted to secure all or part of their pricing for up to three years and contracts from previous years had carried over, it expected to pay the majority of its direct suppliers in the southern region an average $5.67/kg MS.
Contract prices offered for 2016/17 are $5.50/kg MS for three years and $5/10/kg MS for one year.
“Our 2016 opening pricing is a sign of Lion’s confidence in the dairy market, and in our turnaround strategy,” Lion Dairy & Drinks managing director, Peter West, said.
“We continue to focus on driving profitability in key dairy categories through our premium dairy brands and market-leading innovation.
“Lion’s range of pricing and contract options is designed to help farmers better manage market volatility.
“We are proud to offer southern farmers one, three and five-year contract options with the ability to fix pricing on up to 50 per cent of volumes for up to three years.
“Since pioneering our flexible model, we’ve seen strong take up by farmers of our fixed pricing options.
“Lion’s pricing model allows farmers to select the blend of risk and certainty that’s right for their business.
“We believe it helps farmers to plan for the future.”
Almost 400 dairy farmers supply Lion, comprising of 180 direct suppliers and 218 through the Dairy Farmers.
In New South Wales, Lion announced a weighted average milk price of 53.7 cents per litre for its direct suppliers.
Elsewhere in Australia Lion’s pricing remains unchanged.
In South East Queensland Lion offers direct farmers 59.6c/l, while in Far North Queensland Lion offers the DFMC 59.2c/l.
Lion will continue to pay direct farmers in WA 54.7c/l.
Source: Adf.farmonline.au