MG steps up farmgate prices despite tough market conditions

Murray Goulburn (MG) says a drive to improve efficiencies in the business has enabled it to offset low international dairy prices and the high dollar and provide its supplier-shareholders with a third step up in milk price for the season.

MG Managing Director Gary Helou has advised shareholders of a price increase of 8c/kg butterfat and 20 c/kg protein for milk supplied across the 2012/13 season. The increase will take MG’s weighted-average available price to $4.90 per kilogram milk solids.

“Improving our business performance by generating efficiencies in our operations and value in our markets has enabled us to increase farmgate returns in an otherwise very difficult market environment,” Helou said.

“Our big efforts during the last 12 months to lower our headcount and strip out $100 million in operating costs are enabling us to generate the operational savings to fund this step up.”

Helou said MG would continue to strive for further increases in farmgate price, but warned that this was in an environment of low international dairy prices, higher feed costs, poor dairying seasonal conditions and a high Australian dollar.

Lower European Union intervention inventories and a slower second-half dairying season in New Zealand, anchored by the ongoing strong demand in emerging markets, are promising signs that could result in lifting prices early in the next financial year, Helou said.