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Aussie dairy farmers devastated by latest cut to milk prices

Staff writer ▼ | June 30, 2016
Dairy farmers in the Australian state of Victoria have been left devastated by another reduction in milk prices for the upcoming season.
Australia cow
Dairy Down Under   The price is below the cost of production
Murray Goulburn (MG), the largest processor of milk in Australia, set the industry's opening milk price earlier this week at $3.16 for the upcoming 2016-17 season, an all-time low.

United Dairy Farmers Victoria President Adam Jenkins told Australian radio on Wednesday that dairy farmers have again been left feeling "numb" and "gutted" by the latest price cuts.

"This opening price is below the cost of production for many dairy farmers and we'll all need to pull together to get through the months ahead," Jenkins said on Wednesday morning.

"Dairy farmers are still carrying the weight of MG's poor management decisions that's led to the debt they're being forced to repay on the back of this low opening milk price."

The Victorian farmers are frustrated after Murray Goulburn initially cut milk prices back in April to between 3.51 and 3.70 U.S. dollars per kilogram of milk solids, down from 4.14 U.S. dollars.

Murray Goulburn had initially promised to pay farmers 4.44 U.S. dollars per kilogram of by the end of the current financial year. The farmers have been left with huge operating costs, while Murray Goulburn has blamed the difficult market conditions for the cuts.

Murray Goulburn has said they expect the prices to rise again to 3.55 U.S. dollar per kilogram by the end of the next financial year.

"This is a conservative price, and it's most likely that MG is erring on the side of caution, but it opens up the possibility of stepping up to a more reasonable price later in the season," Jenkins said of the predicted rise.

Earlier this week, Murray Goulburn's interim CEO David Mallinson acknowledged the upcoming season would be a challenging one for suppliers.

"We are aware our farmers will be hard done by with cash flow next year, and we'll be working hard with the farmers to bring cash flow to them as hard as we can," Mallinson told the Australian Broadcasting Corporation (ABC).

"We opened up with with the highest price we could."

Australian Prime Minister Malcolm Turnbull said the government plans to hold talks with Murray Goulburn after the latest price cuts.

"If we are re-elected, what I will do is sit down with the management of Murray Goulburn and directors and go through these issues," Turnbull told an Australian radio station.

Turnbull said the treatment of farmers was worrying and causing the government great concern.