“This is the darkest day since deregulation.”
Killawarra’s Robert Walsh is bleak in his reaction to the milk price cut by Murray Goulburn.
On Tuesday, June 28 Murray Goulburn announced an average opening price of 46.7 cents per litre for the NSW-Sydney region.
Robert is a Murray Goulburn supplier and runs a farm with his brother Leslie at Killawarra near Wingham.
This cut causes a 6 per cent drop for their farm.
Robert said he wasn’t expecting a cut this big.
“I was gobsmacked actually,” said Robert.
“After what happened to Victoria I was expecting one or two cents, but not to this extent. It doesn’t make any sense.”
Robert explained his confusion lies in that he thought Murray Goulburn supplies the domestic market, whereas Victoria is linked to the world market.
“Victoria is linked to the world price, they understand that, and work to those conditions,” he said.
The Manning River Times asked Murray Goulburn if the Sydney Milk Region (NSW) milk, supplies domestic milk, why is there a milk price decrease. A spokesperson for Murray Goulburn said, “the farm-gate milk price in Sydney and elsewhere is primarily driven by global dairy commodity prices, which are trading at historic lows and have been for a protracted period”.
Robert said this price is below his cost of production.
“By cutting production, you are creating a vicious cycle, where you buy less fertiliser, less feed and so on, this means less milk is being produced,” he said.
“This will cause a flow on effect to the community, farmers won’t have the money to spend in the local produce stores, or on machinery.”
Robert said he would look for alternatives, but there are none.
“There is a global over supply of milk, suppliers will not take anyone else on.”
Northern NSW co-operative Norco this week announced it will maintain its average price of 57 cents a litre for its northern suppliers. However, southern suppliers will receive a two cent cut.
In April 2013 Coles supermarket announced two long-term contracts with Murray Goulburn for ten years and Norco for five years. The two co-operatives cover Coles Brand milk supply in New South Wales, south east Queensland and Victoria. The contracts include a rise and fall clause, meaning Coles pay more for the milk when the farmgate price is higher and less when it falls.
A Coles spokesperson told the Manning River Times, “Coles pays Murray Goulburn the farm-gate price, plus processing and other production costs, as well as an additional margin”.