The ramifications of Murray Goulburn’s decision last year to slash its milk price last year are still being felt with the company on Monday revealing its milk supply this season had dropped by 34 per cent on last year’s.
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In its latest release to the Australian Securities Exchange, MG said it expected to receive about 2.3 billion litres in 2017-2018, without taking in any significant changes from seasonal impacts.
The big drop in milk supply from the 3.5 billion litres MG received in 2016-2017 reflects a big movement by dairy farmers in search of better prices away from MG to other processors.
MG on Monday said the reduction in milk intake will not affect the opening average farmgate milk price of $5.20 a kilogram milk solids (kgms) that it is offering farmers.
It said the impact of the drop in its milk supply had been offset by various cost and business improvements.
But it warned its forecast full year milk price range of $5.20-$5.50 kgms could be under threat if the recent strengthening of the Australian dollar continued over the full financial year.
“This could create some uncertainty in relation to the achievability of $5.50/kg MS,” MG said.
“MG will continue to consider all avenues to maximise the available farmgate milk price.
“MG will provide a further business update at the time of the release of the 2016-2017 full year results announcement on August 22, 2017, or earlier as required,” it said.
It said the business was expected to recommence local manufacture of dairy products in the future and the commercial terms of the transaction were confidential.
MG also said it had appointed Deutsche Bank AG as financial adviser to MG for the previously announced comprehensive strategic review of the dairy cooperative.
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